ORDER
P. Karthikeyan, Member (T)
1. These appeals are filed by M/s. Southern Iron and Steel Company Limited against the Orders-in-Appeal No. 141 & 142/2002 dated 10.7.02 passed by the Commissioner (Appeals), Trichy. In the impugned orders, the Commissioner (Appeals) has sustained denial of credit to various goods by the original authority which the appellants had claimed to be capital goods eligible for modvat credit.
2. Heard both sides. Credit was denied on various items but the appellants have challenged the orders only as regards the following items in respect of appeal No. E/537/05:
1) UPS and Battery: Credit was disallowed on these items on the ground that they were not capital goods. We find that these items are required for supply of standby power in the event of power failure in the plant. These are not consumable items and are essential for the working of the plant. They are capital goods as defined in Explanation 1 of Rule 57Q.
2) Tubes, Pipes and Fittings: Credit for these items was disallowed for the reason that they had been brought under the purview of capital goods of Rule 57Q only with effect from 23.7.1996. It is seen that these items are necessary for conveyance of water, steam and air to different machines which is imperative for the smooth running of the steel mill. They are capital goods even though they were specifically included in the list of capital goods with effect from 23.7.1996.
3) GI coupler plates, M.S. Sheets, Cable Trays
As per the impugned order structure/pipes fabricated using these goods were not eligible for capital goods credit, as such structure/pipes became eligible for credit only with effect from 23.7.1996. In the case of Perambalur Sugar Mills Ltd. v. CCE, Trichy , the Tribunal decided that MS plates etc fabricated and used as spares in capital goods were eligible for credit under Rule 57Q(1). In Varalakshmi Sugars Ltd v. CCE, Hyderabad 2001 (137) ELT 96 (Tri. Chen) it was decided that Modvat credit was admissible on M.S. plates following various case law. Therefore, GI coupler plates and M.S. sheets used to fabricate structure/pipes are eligible for credit under Rule 57Q. Cable trays are used for facilitating transmission of power through cables and are eligible for capital goods credit.
4) Centralized Lubricating system: This item was denied credit as the same was not specified as eligible capital goods at the material time. Undisputedly the centralised lubricating system enables smooth functioning of various machinery in the plant and has to be treated as an essential accessory to these machines eligible to capital goods credit.
5) Blower Fans, dedusting fans, air blower:
These items were denied credit for the reason that they were parts of the power plant which generated electricity. Power is essential for the functioning of the steel mill and these parts of power plant located within the factory are capital goods as per explanation (1) of Rule 57Q. These items have already been decided to be eligible for credit as capital goods in the assessee’s own case, CCE v. Southern Iron & Steel Co. Ltd. .
6) Whyheat – C: This material is used for bonding refractory bricks and is a chemical. Credit was denied for the reason that such chemicals are not capital goods. Undisputedly the item forms part of the furnace which is capital goods. Therefore whyheat – C is eligible for credit as capital goods being part of the furnace.
7) Vibrating feeders: Credit was denied on these items as the same are material handling equipment. Material handling equipment participate in the production process by making available the required process materials at the various points within the plant. Therefore these items are also eligible for credit as capital goods.
8) Refractory bricks: Credit was denied to this item for the reason that refractory bricks were not capital goods as pet definition. As the refractory bricks form part of the furnace for producing steel the same have to be necessarily considered as capital goods as per the definition contained in Rule 57Q. Capital goods credit is therefore admissible to this item.
9) Credit was disallowed for certain items for the reason that the appellants had not produced relevant documents. During the hearing before us, it was claimed that documents had been produced. As the dispute can be resolved only by a scrutiny of the connected documents, the issue is remanded to the original authority to decide the eligibility to the disputed credit. The appellants abandoned claim for credit on emitting electrodes during hearing. Therefore the appeal in respect of this item is treated as withdrawn. The appeal is disposed as above.
9) The following items are covered by Appeal No. E/539/2002
1) Tubes, Pipes and Fittings : The impugned goods had been received during the period 1994-95. Credit was disallowed for the reason that pipes were specifically included for capital goods credit with effect from 23.7.1996. Pipes are used to carry water, air or steam to various machines at different points within the factory. They are eligible for capital goods credit.
2) Refractory Bricks: Credit was disallowed as the item was specified for capital goods credit with effect from 16.3.1995 and as the subject goods had been received earlier to that date. Refractory bricks form part of the furnace and were eligible for credit as capital goods credit even prior to 16.3.1995.
3) Goods used in Boiler, Blower House and Compressor House: Credit was disallowed as these items are parts of the power plant. Power plant generates electricity/steam and is located within the factory. The steam and power are essential in the process of production of steel. Therefore these parts of the captive power plant are eligible for capital goods credit.
4) Material handling equipment: These items participate in the process of production by making process materials available at various points within the plant. Therefore these items are also eligible for credit as capital goods.
5) Jaw Crusher: Credit was disallowed on the ground that the item was used for preparing clay mass and had nothing to do with the manufacturing activity. We find that Jaw crusher is used in the blast furnace to crush the raw material. It participates in an integral part of the manufacturing process. Therefore this item is eligible for credit as capital goods.
This appeal is disposed of accordingly.
(Operative portion of the order pronounced in open Court on 25.7.2006)