COMMISSIONER OF CENTRAL EXCISE Vs. SURYA ROSHNI LTD.

JUDGEMENT

(1.) THE issue involved in this appeal, filed by the Revenue is regarding the availability of Modvat credit of the duty paid on Electrostatic Powder Coating Unit.

(2.) SHRI R.C. Sankhla, learned SDR, submitted that M/s. Surya Roshni Limited, Respondents, manufacture GLS Bulbs; Tungsten Halogen Lamps and Fluroscent Tube Lights; that, they had installed 'Electrostatic Powder Coating Unit' in their factory on 31 -5 -96 and used the same in the production of non -dutiable final product i.e. Lamp costing less than Rs. 10/ -; that they had availed the Modvat credit on 20 -6 -97, nearly 13 months after the date of installation of machine; that the Assistant Commissioner had allowed the Modvat credit, under Order -in -Original No. 139/98, dated 30 -6 -98 on the ground that on the date of availing of credit, the final product GLS Lamp costing less than Rs. 10/ - had become dutiable; that Commissioner (Appeals) also, under the impugned Order, has rejected Revenue's appeal, holding that as there was no time limit applicable for taking the credit under Rule 57Q, Provisions of Rule 57R(1) were not attracted in the matter. He relied upon the decision in CCE, Coimbatore v. Sengunthar Spinning Mills - 1998 (99) E.L.T. 409 (T) wherein it has been held that "the availability of Modvat credit has to be determined at the time when the goods are received in the factory and if no Modvat credit was available at that time, the question of subsequently making available any Modvat credit would not arise." Reliance has been placed on the decision in CCE, Coimbatore v. Best Cotton Mills (P) Ltd. - 1999 (105) E.L.T. 647 (T) wherein also it has been held by the Tribunal that "the eligibility to the Modvat credit under Rule 57Q has to be determined at the time when the goods are received and if at the time of receipt the Modvat credit is not available, the particular machine cannot be taken into reckoning for grant of Modvat credit, even if subsequently the particular machine comes within the purview of the definition of capital goods by amendment of Rule 57Q. The learned SDR, therefore, contended that as at the time of installation of impugned machine, it was used exclusively in the manufacture of exempted final product, the question of availing the Modvat credit subsequently when the final product became dutiable does not arise. He has also referred to the decision in Tata Oil Mills Co. Ltd. v. CCE, Calcutta -1, 1996 (84) E.L.T. 132 (T) wherein it has been held by the Tribunal that the rate of credit admissible would be the one prevailing on the date when the inputs were received by the appellants and the enhanced rate which came into effect later on is not applicable.

(3.) ON the other hand, Shri B.L. Narasimhan, learned Advocate, submitted that the machine in question can be used in the manufacture of GLS glass lamps in 60 mm dia shells in different wattages in the range of 25W to 100W; that the Assistant Commissioner has given a specific finding in the Adjudication Order that the machine is capable of being used in the manufacture of exempted final products as well as dutiable final products; that the said finding has not been challenged by the Revenue; that Rule 57R(1) is applicable only when in its entire life span only exempted goods are to be manufactured and hence cannot be applied when the capital goods are usable for both exempted as well as dutiable goods; that the decision in Sengunthar Spinning Mills, supra, is not applicable because in that case, the capital goods were used in the manufacture of products which were not specified in Rule 57Q but in the present matter, the final products are specified. The learned Advocate emphasised that if the capital goods within their life time are used in the manufacture of dutiable goods also then such capital goods cannot be treated as exclusively used in the manufacture of exempted final product and the bar under Rule 57R will not apply; that there is no reference to the final product manufactured at the time of receipt of the capital goods in Rule 57Q; that if the final product and the capital goods are specified in the Table annexed to Rule 57Q, Modvat credit will be allowed; that as the Respondents are manufacturing the goods specified in the said Table, the Modvat credit is allowable on the capital goods in question; that it has been clarified by the Board in Circular No. 199/33/96 -CX., dated 23 -4 -1996 that "the limit of six months as prescribed under second proviso to Rule 57G will not apply to availment of credit on capital goods under Rule 57T of the Central Excise Rules, 1944." The learned Advocate relied upon the decision in the case of CCE, Bhopal v. Bhaskar Industries Ltd., Final Order No. A/970/2002 -NB, dated 23 -8 -2002, wherein the Tribunal has held that there is no time limit for utilising the credit and merely because there was no dutiable items, which were required to be cleared on payment of duty on the date when the capital goods credit was taken, that credit cannot be denied. Reliance has also been placed on the decision in Kailash Auto Builders Ltd. v. CCE (A), Bangalore - 2002 (140) E.L.T. 148 (Tribunal) = 2001 (47) RLT 950 (CEGAT), and the Supreme Industries Ltd. v. CCE, Mumbai -V - 2002 (149) E.L.T. 659 (Tribunal) = 2002 (100) ECR 101 (T).