PATTABI ENTERPRISES Vs. COMMISSIONER OF CENTRAL EXCISE, MYSORE

JUDGEMENT

(1.) THE issue to be decided is whether Lithographic Plates and Thermostar are to be treated as inputs or capital goods. The appellant is engaged in Offset printing process. Revenue has taken a view that both plates which are classified under Chapter 8442 has to be treated as capital goods and not as inputs and therefore the 100% credit taken by the appellant was wrong and on this basis, the credit taken by them was demanding with interest and penalty of Rs. 2500/ - was also imposed. Heard both the sides.

(2.) LEARNED Chartered Accountant on behalf of the appellant submitted that the lower authorities have taken the view on the basis of classification of Lithographic plates which according to them comes under CET 8442 and repeated use of Lithographic plates and Thermostar. The learned Chartered Accountant submitted the issue as to whether Lithographic plate is classifiable under CETH 8442 came up before the Tribunal and the Tribunal had taken a view that Lithographic plates and Thermostar are classifiable under CH 37.05 and not under 84.42. What the appellant receives is Lithographic plate and Thermostar which are sensitized. The appellant does the job of exposing and developing. Before this activity is undertaken by the appellant, the product received by them would be classifiable under CH 37.05 only. Even though I agree with the learned Chartered Accountant that because of this decision, the Lithographic Plates received by them would be classified under 37 only but reclassification of inputs or capital goods received cannot be done at the receivers end. Therefore this submission cannot be considered even though valid. Next question that arises is if the Lithographic plates and Thermostar fall under chapter 84 is it necessary that the same has to be treated as capital goods only. No doubt the definition of capital goods specifies the chapter headings which are considered to be capital goods. However this is only for the purpose of decision as to whether the assessee is eligible for the Cenvat credit on the capital goods or not. If a particular item is not classifiable under chapter and it is by nature capital goods, the credit would not be admissible. This does not mean that all products which fall under chapter 84 have to necessarily be treated as capital goods.

(3.) I find considerable force in the argument advanced by the learned Chartered Accountant that Lithographic plates used by them cannot be considered as capital goods. Admittedly once the Lithographic plate is exposed and developed, it can be used only for printing material which has been exposed and developed on the plate. It cannot be used again for exposure and development of another matter. Needless to say utilization will not be a one time affair. If the matter and the material required is the same, Lithographic plate has a particular life and the exposed and developed plate can be repeatedly used to printing the same material. The question that arises does such use make it a capital goods or not. The learned Chartered Accountant relied upon the decision of the Tribunal in the case of M/s. Indian Aluminium Co. Ltd. vide Order No. 887/1996 [1999 (113) E.L.T. 263 (Tri. -Mad.)] wherein the Tribunal took a view that in the case of silver halide films which are used for image transfer for the formation of circuits has to be treated as a eligible input for the purpose of Modvat credit. The lower authorities have taken a view that this decision is not applicable because during the relevant time when the decision of the Tribunal was rendered, Modvat credit was available only for inputs and not for capital goods and during that period clear -cut distinction between capital goods and inputs were not available in the statute. I agree with the stand taken by the learned Chartered Accountant that what was input prior to introduction of definition of capital goods and Modvat credit for capital goods does not become capital goods once the definition of capital goods is given and credit is made available for capital goods also. Further, I take note of the fact that as and when a printing order is received, the printer has to take a plate, expose and develops the material on that plate and then proceed to print the matter. That being the position, the Lithographic plate, chemical etc. used for printing would all become inputs for the offset printing process and we cannot say that Lithographic plate alone would not be input just because the same can be used repeatedly. Just like other inputs, the Lithographic plate also is relevant only for a particular job which the printer undertakes and the job may be repetitive but the fact remains that the plate cannot be used for any other purpose. Moreover, the printers charges for cost of Lithographic plate, exposure and development cost used by them separately. In any case, the cost of the Lithographic plate exposed and developed is recovered from the person for whom offset printing job is undertaken. All these factors would go to show that a Lithographic plate used by the appellant is an input for a particular offset printing job and that may be repetitive but cannot be said that like a capital goods Lithographic plate is used repeatedly. In view of the facts discussed above, I find Lithographic plate cannot be considered as capital goods and accordingly, I allow the appeal.