ORDER
K.D. Mankar, Member (T)
1. The appeal of M/s U.G. Sugar (party) is directed against the order-in-appeal passed by the Commissioner (Appeals) by which Modvat credit under the capital goods Modvat scheme has been disallowed to the appellants in respect of the following items :-
(1) HR/MS/GC Sheets/Plates/Angles/Channels/Supporting structure, etc. (2) Bailing Press. Penalty of Rs. 25,000/- was also imposed on the appellants. In the said Order-in-Appeal, the ld. Commissioner (Appeals) allowed credit in respect of - (i) Lubricating system, (ii) Contact less pick-up, and (iii) Pace man (Steam packing).
2. The Revenue has filed cross appeal against extension of credit to these items viz. Appeal being No. E/1369/03-NB(SM). Both appeals being related to a common order-in-appeal are taken together for disposal through a common order.
3. Heard both sides.
4. The appellate authority denied the credit on HR/MS Plates, etc., by observing as under ;-
“The appellants have not placed any corroborative evidence on record regarding the precise use of these items. Fabrication/construction materials have been held by the Tribunal as not being covered by the definition of capital goods.” In this case the dispute pertains to the period from September, 1995 to November, 1995. I notice that, the Commissioner (Appeals) has made a correct observation that unless the use of these items is clearly established to hold them as parts/accessories components of capital goods installed in the factory, these cannot be considered as eligible for taking credit. The quotations of plates/sheets used as replacement for worn out plate/sheets of machinery or a pipeline would be covered by the term parts/components. However, in the absence of any data furnished by the assessee, the eligible amount cannot be worked out. Therefore, I hold that the credit has been correctly denied by the Commissioner (Appeals) on these items.”
5. Bailing Press – The credit has been denied on the ground that this is a new plea, not raised before the original authority. I note that, there is no bar in raising the new plea. The claim for credit, having not been examined on merits by the appellate authority, the matter regarding determination of eligibility of this item for credit, is remanded to the Commissioner (Appeals), who shall, pass orders thereon, after following the principles of natural justice.
6. The Revenue’s appeal are directed against permitting credit on (i) Lubricating System (ii) Magnetic Pick-up (iii) Pace Man (Steam Packing).
7. As regards lubricating system is concerned, the item falls under Heading No. 8424.90. Credit is denied in the order-in-original on the ground that the item is excluded from the explanation I(d). Actually the same is not specifically listed under explanation I(d)(i) neither it is shown to be covered under any other category of machine. The claim for credit has been made solely on the ground that it is an apparatus/appliance used for lubricating the whole machinery used in the sugar plant. The process of lubrication does not produce or process or bring about any change in any substance. Being not covered, under the scope of capital goods as defined in Rule 57Q, the credit was correctly denied by the adjudicating authority and to that extent the order-in-appeal needs to be set aside.
8. As regards, Pace Man (Steam Packing), it is desired that asbestos packing has already been decided as admissible, hence, the credit should have been permitted. CEGAT judgment 1998 (98) E.L.T. 166 (T-NRB)] relied upon. The item is used for packing steam line. Once this is affixed to a pipeline, it becomes a component part of the pipeline and would therefore be covered under the component category under explanation I(b). Hence 1 hold that the credit has been rightly allowed on the Pace Man (Steam Packing).
9. So far as the credit on contact less Magnetic Pick-up is concerned, the Revenue’s appeal states that, being an item falling under S.H. 9033.00, the same is not included in the explanation I(d)(i) nor it could be demonstrated by the assessee as to which machine, the said equipment forms the part. The extension of credit for this item by Commissioner (Appeals) was therefore not proper.
10. Accordingly, the Revenue’s appeal succeeds in respect of (1) Lubricating System, (2) Contact Less Magnetic Pick-up while it fails in respect of Pace Man (Steam Packing) Revenue’s cross-objection in Appeal No. E/1211/03-NB (SM) is disposed of in above terms.
11. Party’s Appeal E/1211/03-NB (SM) is rejected for (1) Sheets/Plates Structural items and allowed by way of de novo remand to Commissioner (Appeals) for passing a fresh order on merits, in respect of credit on Bailing Press. Keeping in view the fact that, eligibility to credit was subject-matter of interpretation, the penalty imposed is set aside.
12. The appeals of Revenue and the party are disposed off in above terms.