ORDER
Moheb Ali M., Member (T)
1. The issue pertains to eligibility of Modvat credit under Rule 57Q of erstwhile Central Eixcise Rules. The appellant availed of credit on angles, channels, plates, rods etc, as enumerated in the impugned order on the ground that they are required for installation and erection of machinery in his plant. It is the appellants’ plea that such goods are covered under the explanation to Rule 57Q where capital goods have been defined.
2. Heard both sides.
3. The Ld. Advocate for the appellants relied upon the decision of the Tribunal in the case of United Phosphorous Ltd, v. Commissioner of Central Excise & Customs, Vadodam 2002 (150) E.L.T. 650 (Tri.-Mumbai) wherein the Tribunal held that ‘plant’ referred in erstwhile Rule 57Q would include not only the machinery used by a manufacture but also raw material and components employed therein. The Tribunal in the case cited supra relied upon the principles laid down in Jawahar Mills Ltd. v. Commissioner of Central Excise, Coimbatore and held that Modvat credit is extended to elements of factory shed etc. He also relied upon the decision of the Tribunal reported 2001 (137) E.L.T. 96, wherein it was Tribunal held that M.S. Plates, steel structural material, chequred plates are eligible for Modvat credit. In another case reported [2004 (175) E.L.T. 476] the Tribunal held rebar coils, CTD bars. TOR Steel, foist and Cement used for civil construction such as office premises alone are not eligible for credit. The same material when used for construction of concrete sylos, pre-heater tower structure, etc. which are essential for the manufacture of final goods, are eligible for credit. The Tribunal relied upon the Supreme Court’s decision in Jawahar Mills wherein the Supreme Court interpreted the expression ‘plant’ and ruled that such material used in the plant are eligible for credit. A similar opinion was held in the case of Adarsh Industries v. Commissioner of Central Excise, Mumbai-VII. The Ld. Advocate also relied upon the Tribunal’s decision in Mukand Ltd. v. C.C.E., where again it was held that structures which are supportive of conveyor system, become part of structural conveyor system and have been designed to function as part of conveyor system, giving support to it and helping in its efficient functioning are eligible for Modvat credit. He also relied upon the decision of the Tribunal in the case of Kasturi Sugar Mills wherein the Tribunal held that M.S. Structure having been used for installation of plant meant for manufacture of V.P. Sugar and not for fabrication and construction purposes are eligible for credit under Rule 57Q.
4. The Ld. Advocate further relied on the decision of the Tribunal reported in [2001 (135) E.L.T. 1239 wherein it is held that material used for raising structure to support various machine parts are covered by the explanation to Rule 57Q. This decision was later upheld by the Supreme Court 2002 (139) E.L.T. A294 (S.C.). He argued that the Tribunal following its own decision (Order No. A776-777/98-NB dated 8-9-1998) 2004 (177) E.L.T. 161 (Tri. – Del.) held that items like joints channels angles rolled and SS welded tubes and chequered plates and ITR Plates are eligible for Modvat credit as capital goods under erstwhile Rule 57Q. He also relied on the decision of the Tribunal in the case of Lloyds Steel Industries Ltd. 2004 (64) RLT 732 (CESTAT-Mum) where the same view was held.
5. The DR filed the following case law to support his contention that M.S. Angles, channels and structural are not eligible for Modvat credit under Rule 57Q, they being neither machines, machinery etc. nor parts or components thereof of capital goods. He argued that materials used in civil construction are not eligible for capital goods credit.
6. L.G. Hotline CPT Ltd. v. Commissioner 2004 (176) E.L.T. 443 (Tri. -Del.) In this case the Tribunal relied upon Jawahar Mills . The Tribunal interpreted the decision of the Supreme Court in Jawahar Mills and held. These items which are used in the foundation of machineries and equipment are not capital goods.
7. The Tribunal in the case of Nava Bharat Ferro Alloys Ltd. held that chequred plates/hard plates are general purpose items having multifarious use. No evidence as to how the goods are used as components/spares of machinery and are therefore not eligible to credit. The Tribunal also held construction material are not eligible for capital goods credit.
8. The Tribunal in the case of Kesoram Cements 2004 (177) E.L.T. 291 (Tri. – Bang.) held that rebars used for laying the foundation on which machinery erected/installed can not be treated as components spares etc. of the machinery plant or equipment credit is not allowed.
9. Similar view is held in Kitply Industries Ltd. the Tribunal remanded the matter on the ground that the authority has not given a findings on Steel structures of air conditioners as to how such goods are used with machine and machinery.
10. In Binani Cement Ltd. the Tribunal held that Iron and Steel Structures and access platforms are neither machine/machinery/appliances are not components or accessories of machines are ineligible for capital goods credit.
11. In D.S.M. Sugar Mills 2002 (147) E.L.T. 570 (Tri. – Del.) the Tribunal held that structural material bars and rods plain plates channels and joists used as a foundation for erection of juice extraction machine are not entitled for capital goods credit.
12. In Usha Ispat 2000 (125) E.L.T. 1184 (Tri.) the Tribunal held that M.S. Angles, channels shapes and sections and cement are not eligible for Mod-vat credit under Rule 57Q. The Tribunal in the case of Ganga Kisan Sahkari Chini Mills Ltd. held that steel sheets used in the manufacture of molasses tank are inputs in the manufacture of tanks and not its parts and therefore credit is not admissible.
13. We have considered the plethora of decisions on the subject. There is a vertual jungle out there. It is a difficult path to tread. However one common strain in all the judgments is that construction material, so long as it has nothing to do with the machinery installed in the plant, is not entitled for capital goods credit. For instance if cement is used in the construction of a wall of a building in which the machinery is housed it is not covered under Rule 57Q but if the same cement is used in the construction of a foundation for a boiler it is cohered. Thus in each case the facts could be different and so are the decisions.
14. In the present case it was pleaded before the Commissioner that angles, channels plats etc on which credit is sought to be denied were structural items for machinery required to make the machines function without any vibration or movement. If that were to be the case these items cannot be termed as material used in the construction of a building. The Commissioner has not negated this plea but simply held that the material in question are used in the construction of the plant and therefore are not covered under Rule 57Q. This finding of the Commissioner without any evidence to support it needs to be rejected. As per the appellants contention raised before the Commissioner it appears that the structural items are clearly linked with the machinery that is used in the production of final products. Thus following the decision of the Tribunal in United Phosphorous, Sirpur Paper Mills, Simbhoali Sugar Mills and Lloyds Steel we hold that Modvat credit is admissible on the structural items which are so used as to make the machinery vibration free. We observe that over the years Rule 57Q and the explanation thereto has been interpreted liberally to take even the structurals in the ambit of capital goods provided that such structurals are closely associated with the machinery installed in a plant,
15. We are therefore of the opinion that the impugned goods are eligible for Modvat credit under Rule 57Q as it existed.
16. The appeal is allowed. The order of the Commissioner is set aside.
(Dictated in Court)