ALKYL AMINES CHEMICALS LIMITED Vs. CCE

JUDGEMENT

(1.) The issue raised in both these appeals is the eligibility of items like storage tanks, electrical cables, electric motors, electric board, spares for control panels, pipes, fittings etc. for modvat credit as capital goods. The main ground for denying credit is that no manufacturing or processing activity is being carried out by these items. A view has been taken that only items used for producing or processing or bringing about any change in substances for the manufacture of finished products would be eligible for modvat credit. Reliance has been placed on the decisions of the Apex Court and the Tribunal to the effect that every process does not amount to manufacture.

(2.) As against this, the appellants have contended that every plant, equipment etc. installed in the factory for the purpose of manufacturing finished goods would be eligible of the benefit of modvat credit. During the hearing of the case, learned Counsel for the appellants also pointed out that the question is no more res Integra as eligibility of capital equipment and items for modvat credit remains settled by the decisions of the Tribunal and in particular the Larger Bench decision in Jawahar Mills Ltd., 1999 (108) ELT 47 which has been confirmed by the Apex Court. Learned Counsel also referred to the following decisions: Storage Tank in Appeal No. E/1978/97:

(3.) I have perused the records and have heard the learned Jt. C.D.R. Apart from the fact that the items in question are specifically covered by the decisions in favour of the assessee (as explained by the learned Counsel for the assessee), it is to be noted that Revenue Authorities are not justified in holding that only capital goods directly participating in production or processing can be treated as capital goods eligible for modvat credit. This is to overlook the complexities involved in manufacturing. Organised large scale production would not be possible without assisting storage and material handling equipment and facilities for ensuring proper storage and flow of inputs and finished products. Further, ancillary equipments are required for environment protection. All these items come within the scheme of capital goods and all these items are also eligible for modvat credit. The narrow view taken in the impugned orders is not justified.