{"id":70331,"date":"2008-07-01T00:00:00","date_gmt":"2008-06-30T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/hindustan-zinc-ltd-vs-union-of-india-ors-on-1-july-2008"},"modified":"2019-01-24T13:48:37","modified_gmt":"2019-01-24T08:18:37","slug":"hindustan-zinc-ltd-vs-union-of-india-ors-on-1-july-2008","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/hindustan-zinc-ltd-vs-union-of-india-ors-on-1-july-2008","title":{"rendered":"Hindustan Zinc Ltd vs Union Of India & Ors on 1 July, 2008"},"content":{"rendered":"
Rajasthan High Court – Jodhpur<\/div>\n
Hindustan Zinc Ltd vs Union Of India & Ors on 1 July, 2008<\/div>\n
                                         1\n\n IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT\n                    JODHPUR\n  -----------------------------------------------\n\n                       CENTR.EXCISE APPEAL No. 2 of 2006\n\n                                    HINDUSTAN ZINC LTD\n                                        V\/S\n                                   UNION OF INDIA & ORS\n\n       Mr. RAMIT       MEHTA, for the appellant.\n\n       Mr. KULDEEP MATHUR, for the respondents.\n\n       Date of Order : 1.7.2008\n\n\n                                        PRESENT\n\n                     HON'BLE SHRI N P GUPTA,J.\n            HON'BLE SHRI KISHAN SWAROOP CHAUDHARI,J.\n\n\n                                         ORDER\n<\/pre>\n
                                         —–\n<\/p>\n
            This       appeal,    by    the    assessee,     has      been    filed<\/p>\n
against     the    order     of        the    tribunal      dated     26.7.2005,<\/p>\n
dismissing       the    same,     by    relying      upon    a   larger       Bench<\/p>\n
judgment of the Tribunal, in                  Jaypee Rewa Plant Vs. CCE,<\/p>\n
reported in 2003 (159) ELT 553, and thereby upholding the<\/p>\n
disallowance of modvat\/ cenvat credit.<\/p>\n
            The necessary facts are, that the assessee was<\/p>\n
issued a show cause notice, on the ground, that assessee<\/p>\n
has availed modvat\/cenvat credit on welding electrodes,<\/p>\n
during June, 2003 to March, 2004, treating the same as<\/p>\n
capital goods, whereas the same appeared not to be covered<\/p>\n
under the definition of capital goods.\n<\/p>\n<\/p>\n
             The assessee contested the notice and contended,<\/p>\n
that     while     electrodes          were    not    used       by    them     for
\n                                2<\/span><\/p>\n
fabrication   of    structure\/sheds,     rather    they     are<\/p>\n
accessories   of   machinery   for   soldering,   brazing   or<\/p>\n
welding, falling under Chapter Heading No.84.68 and since<\/p>\n
Chapter Heading No. 84.68 is an item, eligible under Rule<\/p>\n
2 b (i) of the Cenvat Credit Rules, 2002, the welding<\/p>\n
electrodes acquires eligibility under Rule 2(b)(iii).       It<\/p>\n
was also contended, that if the credit is not allowed<\/p>\n
under capital good scheme, then, the claim of the assessee<\/p>\n
may be treated as having been made treating the electrodes<\/p>\n
as inputs. It was then contended, that welding electrodes<\/p>\n
are necessarily used for maintenance of their plant for<\/p>\n
smooth running, as these are mainly used for affixing the<\/p>\n
component, namely sheets, plates etc. on the damaged parts<\/p>\n
of the machines. As such they are being used as inputs, in<\/p>\n
or in relation to, the manufacturer of final products.<\/p>\n
          Learned Dy. Commissioner confirmed the demand,<\/p>\n
by holding, that the welding electrodes do not fall under<\/p>\n
any of the heads mentioned in Rule 2. Since goods are used<\/p>\n
for repairing\/maintenance of the capital goods, are not<\/p>\n
eligible for Cenvat credit.\n<\/p>\n<\/p>\n
         Aggrieved by this order, appeal was filed before<\/p>\n
the commissioner, which came to be dismissed, by holding,<\/p>\n
that welding electrodes are not eligible capital goods,<\/p>\n
and since they have been used for maintenance of plant and<\/p>\n
machinery, and have not been used, in or in relation to,<\/p>\n
manufacture of finished goods, they do not satisfy the<\/p>\n
definition of “inputs”.\n<\/p>\n
                                         3<\/span><\/p>\n
             A    further      appeal        filed     before    the   learned<\/p>\n
Tribunal was dismissed.\n<\/p>\n<\/p>\n
             This    appeal      was        admitted     on     13.1.2006,   by<\/p>\n
framing the following substantial question of law:-<\/p>\n
             “Whether welding electrodes used for repairs and<\/p>\n
             maintenance of plant and machinery are eligible<\/p>\n
             for cenvat credit both as capital goods as well<\/p>\n
             as inputs”.<\/p><\/blockquote>\n
             We have heard learned counsel for the parties<\/p>\n
and have gone through the judgment in Jaypee Rewa plant’s<\/p>\n
case,   as   relied     upon    by     the     learned    counsel      for   the<\/p>\n
department, and have also gone through the judgment of<\/p>\n
Hon’ble Supreme Court, in CCE Vs. Jawahar Mills, reported<\/p>\n
in 2001 (132) ELT 3, relied upon by the learned counsel<\/p>\n
for the appellant.\n<\/p>\n<\/p>\n
             In     judgment     of         Hon’ble     Supreme     Court    in<\/p>\n
Jawahar’s case, it is held, that capital goods can be<\/p>\n
machines, machinery, plant equipment, apparatus, tools or<\/p>\n
appliances. Any of these goods, if used for producing, or<\/p>\n
processing of any goods, or for bringing about any change<\/p>\n
in any substance, for the manufacture of final product,<\/p>\n
would be ‘capital goods’, and would qualify for Modvat<\/p>\n
credit. Then as per clause-b the components, spare parts<\/p>\n
and accessories of the goods mentioned above, would also<\/p>\n
be capital goods, and would qualify for modvat credit.<\/p>\n
Then    moulds and dies, generating sets, and weigh etc. has
\n                                               4<\/span><\/p>\n
also been held to be eligible for modvat credit, even if<\/p>\n
they are not used for producing the final product, or used<\/p>\n
for process of any product, for the manufacture of final<\/p>\n
product, or used for bringing about any change in any<\/p>\n
substance, for the manufacture of final product.                                       The only<\/p>\n
requirement        is,     that    the       same       should             be   used    in    the<\/p>\n
factory of the manufacturer, thus, it was held, that the<\/p>\n
language is to be interpreted very liberally. Then the<\/p>\n
contention of the Revenue, about the goods involved, being<\/p>\n
not   satisfying          the     requirement               of    capital         goods,      was<\/p>\n
negatived on the ground, that it was not the case of the<\/p>\n
Revenue, set up all through.\n<\/p>\n<\/p>\n
             On      the       other        hand       in        JP    Rewa’s       case      the<\/p>\n
eligibility of credit was denied, which was claimed as<\/p>\n
“inputs”.      Then so far as the claim made for modvat credit<\/p>\n
on the basis of it being capital goods, it was denied only<\/p>\n
on the ground, that in the declaration, it was not so<\/p>\n
claimed, and the assessee has not even furnished details<\/p>\n
of any capital goods for captive consumption, to enable<\/p>\n
the   adjudicating          authority             to    ascertain,              whether      such<\/p>\n
goods were covered by definition of capital goods.                                         Thus,<\/p>\n
for   want    of     evidence          to    show,          that       any      part    of    any<\/p>\n
electrodes, and gases, was used in the manufacture of any<\/p>\n
capital      goods       for    captive           consumption,              the    claim      was<\/p>\n
negated.\n<\/p>\n<\/p>\n
             In    our     view,       the     judgment               of   Hon’ble      Supreme<\/p>\n
Court, in JK Cottons SPG. & WVG Mills Co. Ltd Vs. Sales<\/p>\n
Tax Officer, Kanpur, reported in 1997 (91)                                      ELT 34, has a
\n                                           5<\/span><\/p>\n
material      bearing       on    the     controversy          involved     in     the<\/p>\n
present case.          It may be noticed, that the tribunal in<\/p>\n
J.P. Rewa case has referred to this judgment of Hon’ble<\/p>\n
Supreme Court in JK Cotton’s case, by reproducing a part<\/p>\n
of     the    head     note,       but    then,     the     very      significant<\/p>\n
continuing        next        sentence        has     been        omitted        from<\/p>\n
consideration, in as much as the sentence following the<\/p>\n
portion quoted by the tribunal, is as under:<\/p>\n
              “They need not be ingredients or commodities
\n              used in the processes, nor must they be directly
\n              and actually needed for “turning out or the
\n              creation of goods”<\/p><\/blockquote>\n
              In that case the Hon’ble Supreme Court even went<\/p>\n
to     the    extent     of       holding,     that       use    of   electrical<\/p>\n
equipments, like lighting, electrical humidifiers, exhaust<\/p>\n
fan etc. were also taken to be necessary equipment, to<\/p>\n
effectively      carry       on    the    manufacturing          process.        Thus,<\/p>\n
with the above, if the quoted part of the judgment in JK<\/p>\n
Cotton’s      case     is     read,      it   becomes       clear,     that        the<\/p>\n
expression “in the manufacture of goods” should normally<\/p>\n
encompass      entire       process      carried    on    by    the   dealer,       of<\/p>\n
converting raw materials into finished goods, where any<\/p>\n
particular      process,          or     activity,        is     so   integrally<\/p>\n
connected with the ultimate production of the goods, but<\/p>\n
for    that   process,        manufacturing,        or     processing       of     the<\/p>\n
goods would be commercially inexpedient, goods required in<\/p>\n
that    process      would,       fall    within      expression       ”    in     the<\/p>\n
manufacturing of goods”.\n<\/p>\n
                                         6<\/span><\/p>\n
            In   our   view    the      proposition       propounded     above<\/p>\n
sets the controversy at rest.                The question, as framed, is<\/p>\n
accordingly      required     to   be       answered    in   favour    of   the<\/p>\n
assessee.\n<\/p>\n<\/p>\n
            We   are   not    inclined        to   accept    the   logic    and<\/p>\n
reason   given    in   the    JP     Rewa     plant     mills’s    case,    and<\/p>\n
following the letter and spirit of the JK Cotton’s case<\/p>\n
coupled with Jawaharmal’s case, set aside the order of the<\/p>\n
authorities below.\n<\/p>\n<\/p>\n
            In view of the above discussion, the question so<\/p>\n
framed, is answered in favour of the assessee and against<\/p>\n
the revenue. Resultantly the appeal is allowed.                       Impugned<\/p>\n
order is set aside.          The appellant is held to be entitled<\/p>\n
to the credit as availed.               The notice issued by the Dy.<\/p>\n
Commissioner       accordingly          stands         quashed,    and      the<\/p>\n
proceedings dropped.\n<\/p>\n
( KISHAN SWAROOP CHAUDHARI ),J.                          ( N P GUPTA ),J.<\/p>\n
\/ns\/\n <\/p>\n","protected":false},"excerpt":{"rendered":"
Rajasthan High Court – Jodhpur Hindustan Zinc Ltd vs Union Of India & Ors on 1 July, 2008 1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR ———————————————– CENTR.EXCISE APPEAL No. 2 of 2006 HINDUSTAN ZINC LTD V\/S UNION OF INDIA & ORS Mr. RAMIT MEHTA, for the appellant. Mr. KULDEEP MATHUR, for […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,19],"tags":[],"class_list":["post-70331","post","type-post","status-publish","format-standard","hentry","category-high-court","category-rajasthan-high-court-jodhpur"],"yoast_head":"\nHindustan Zinc Ltd vs Union Of India & Ors on 1 July, 2008 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/hindustan-zinc-ltd-vs-union-of-india-ors-on-1-july-2008\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Hindustan Zinc Ltd vs Union Of India & Ors on 1 July, 2008 - 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