S.L. Peeran, Member (Judicial)
1. This is a Revenue appeal against order-in-appeal No. 115/97 CBE) dated 24.3.1997 by which the Commissioner has reversed the Assistant Commissioner’s order rejecting Modvat credit on capital goods like comparator stand, T.B. Liner sly dawy material, panel board, granite inspection bench and plastic strapping machine.
2. The present appeal challenges the grant of modvat credit to items viz. (a) panel boards & (b) plastic strapping machine. The Commissioner in his order has relied on Tribunal’s judgment and the findings given by him in para 4 to 7 are reproduced herein below:
“The appellant have explained that the panel board is a digital read out fitted to MI TR milling machines for display of linear positioning of the milling machine. Similarly, they have stated that the plastic strapping machine is used for packing of their products viz. clutch assemblies which are put inside a corton box for fastening of the corton box. They have also stated that as per CEGAT order in L & T- 1994 (53) 595 (T) credit could not be denied on endorsed Bill of Entry.
I find force in the above plea. In the case of MM Forgings the Tribunal has specifically ruled that Rule 57Q and 57S are to be read in a harmonious manner and accordingly, the items which are used “in or in relation to” the manufacture of final product would be eligible for the capital goods credit. From the explanation offered by the appellants, it is clear that the impugned two items i.e. panel board and plastic strapping machine are essential for the manufacture of the final product. Therefore, they have to be extended the modvat credit.
Similarly the AC was in error to have disallowed the credit on the plea that Bill of Entry was not in the name of factory but as Madras & that endorsed by that office. Applying the ratio of the case law in Larsen & Tourbo cited supra, the credit can be extended where the items are transferred from one unit or another unit of the same manufacturer. In fact, in the case of Polyplast Limited reported in 1996 (83) ELT 681 (T), the Tribunal has held that credit cannot be denied merely because it was raised on the basis of endorsed Bill of Entry in somebody’s name provided the goods are received in the factory of the claimant and if the other person has not availed the credit thereon as per endorsement on the reverse of the Bill of Entry. Here the Bill of Entry was in the name of not somebody else but the same company at Madras. Even if it is some other unit of the same company and not the headquarters, the above ratio can be applied. Therefore, credit has to be extended after verification that nobody else has availed the credit based on the same Bill of Entry.
In the light of the above discussions, the appeal is allowed.”
3. Ld. DR V. Ramakrishnan submits that during the relevant period, these items were not covered within term of capital goods and there were several judgments also available in Revenue’s favour as is noted in the appeal. He seeks for the reversal of order of the Commissioner (Appeals).
4. None appeared for the Respondents despite notices being served.
5. Considering the prayer of the Revenue, we notice that the issue was referred to Larger Bench in the case of Jawahar Mills Ltd. Vs. CC reported in 1999 (108) ELT 47 and the Larger Bench on due consideration has laid down the proposition that any material which is used directly or indirectly for manufacturing of final goods are covered within the term ‘capital goods’ and had upheld the assessee’s pleas for grant of modvat credit. A similar view was expressed in earlier Larger Bench judgment in the case of Union Carbide India Ltd. Vs. CCE reported in 1996 (86) ELT 613 and in another Larger Bench in the case of CCE Vs. Surya Roshini Ltd. reported in 2001 (128) ELT 293 (Tri-LB).
6. In view of the matter having been settled by the Larger Bench judgments, we find no merit in this appeal and hence the same is rejected.
(Pronounced & dictated in open court)