Commissioner of Central Excise
Versus
A.C.C. Ltd.
Excise Reference No. 20 of 2001 with Ex. Ref. No. 1 of 2002, decided on 5-9-2008
Advocated By -
Shri Sandeep Sharma, Assistant Solicitor General, for the Petitioner.
S/Shri Sudeep Singh and Rahul Mahajan, Advocates, for the Respondent.
[Order per : Deepak Gupta, J. (Oral)]. -
These two reference petitions are being disposed of by a common judgment since similar questions of law are involved in both the cases.
2. Excise Reference No. 20 of 2001 has been admitted on the following question of law :
"Whether the Hon'ble Tribunal was correct in allowing Modvat Credit on items namely Copper/Aluminium Conductor, Impeller and Bulldozer during September, 1995, when the same were not eligible as capital goods as per definition/description of capital goods under Rule 57Q of the erstwhile Central Excise Rules, 1944?'"
3. Excise Reference No. 1 of 2002 has been admitted on the following question of law:
"Whether CEGAT has not erred by considering cold frame sections as capital goods under Rule 57Q of the Central Excise Rules, 1944, which are used for supporting/keeping various machines in position and are not covered under the definition of capital Goods as given in Rule 57Q at the relevant time?"
4. The entire dispute is whether the Copper/Aluminium Conductor. Impeller and Bulldozer as well as cold frame sections can be treated as capital goods under Rule 57Q of the Central Excise Rules, 1944. Rule 57Q which requires to be interpreted in the present case reads as follows :
"57-Q. Applicability. - (1) The provisions of this section shall apply to finished excisable goods of the description specified in the Annexure below (hereinafter referred to as the 'final products') for the purpose of allowing credit of specified duty paid on the 'capital goods' used by the manufacturer in his factory and for utilizing the credit so allowed towards payment of duty of excise leviable on the final products, or as the case may be, on such capital goods, if such capital goods have been permitted to be cleaned under Rule 57-S, subject to the provisions of this section and the conditions and restrictions as the Central Government may specify in this behalf :
Provided that credit of specified duty in respect of any capital goods produced or manufactured-
(a) in a free trade zone and used for the manufacture of final products in any other place in India; or
(b) by a hundred per cent export-oriented undertaking or by a unit in an Electronic Hardware Technology Park and used for the manufacture of final products in any place in India,
shall be restricted to the extent of duty which is equal to the additional duty leviable on like goods under Section 3 of the Customs Tariff Act, 1975 (51 of 1975) equivalent to the duty of excise paid on such capital goods.
Explanation :-For the purposes of this section.-
(1) 'capital goods' means-
(a) machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products;
(b) components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose; and
(c) moulds and dies, generating sets and weighbridges used in the factory of the manufacturer.
(2) 'specified duty' means duty of excise or the additional duty under Section 3 of the Customs Tariff Act, 1975 (51 of 1975)."
5. In the explanation to the Rule, Capital Goods have been defined to mean machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or process of any goods. Even the components and spare parts of the aforesaid have been included in the definition of Capital Goods. The Tribunal held that the material which is the subject matter of the questions of law were Capital Goods within the meaning of this Section.
6. The Apex Court in Commissioner of Central Excise, Coimbatore and others v. Jawahar Mills Ltd. And others, 2001(07)LCX0020 Eq 2001 (132) ELT 0003 (S.C.) = (2001) 6 SCC 274, has held that the language used in the explanation to Rule 57 Q of the Rules is liberal in nature. Each case has to be decided on its own facts and the items fall within the explanation the assessee is entitled to the benefit.
7. This question has been considered by a Division Bench of this Court in Excise Reference No. 7 of 2000 decided on 24-6-2008. We are of the view that the said judgment is applicable to the present case also. If power cables, switch gears, capacitors etc. can be considered as Capital Goods we see no reason why the cold frame sections which hold together the machinery and the Copper/Aluminium Conductor, Impeller and Bulldozer will not fall within the definition of capital goods. The question whether a particular good is a Capital Good or not has to be decided in the context of its user and to this extent the findings of the Tribunal that these items are part of the machinery is a finding of fact.
8. We therefore hold that the goods in question are capital goods and answer the questions in favour of the assessee and against the Revenue.
9. The References are answered in the aforesaid manner. No order as to costs.
