RASI REFRACTORIES Vs. CCE

JUDGEMENT

(1.) This is an appeal at the instance of the assessee challenging the order passed by the Commissioner of Central Excise (Appeals) dated 2.11.1998.

(2.) The appellants are manufacturers of refractory bricks and refractory mortar falling under Chapter sub -heading 6901.00 and 3816.00 of the CETA 1985. The issue arising in this appeal is whether the Escorts JCB 530 Loadall used by the assessee in its factory falling under Heading 84.29 is eligible to modvat credit under Rule 57Q. The assessing authority as well as Commissioner (Appeals) rejected the claim put forward by the assessee for modvat credit under Rule 57Q. Aggrieved by the above, the assessee has come up in appeal.

(3.) According to the assessee Loadall is an item of machinery/equipment coming under the definition of capital goods. The assessee would contend that Loadall is operated on Hydraulic System, and used for handling material in bulk. Bauxite which is raw material used in the appellants' factory is lifted with Loadall from the place of storage and is dumped on to the hopper. Reliance was placed by the assessee on the decision of the Apex Court in CCE v. Rajasthan State Chemical Works to contend that the process of handling, lifting, transfer, transportation of raw materials which the factory is also a process in or in relation to manufacture integrally connected with further operation leading to manufacture of goods. The Commissioner (Appeals) took the view that since Loadall is used for carrying raw material from the place of storage for dumping on the hopper, it cannot be said that the same is used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final product for the purposes of Rule 57Q. It was held that by an exemption Notification No. 14/96 -CE(NT) dated 23.7.1996, Heading 84.29 in which Loadall falls, was specifically excluded from the definition of capital goods. This amendment has to be treated as clarificatory in nature and should be made applicable to the earlier period also. For this reason, the plea put forward by the assessee was rejected by the Commissioner (Appeals). It is contended before us by the appellants that the Commissioner (Appeals) has committed an error in applying the amended rule brought into effect on 23.7.1996. It is submitted that by the above amendment capital goods falling under certain Chapters were enumerated. Before 23.7.1996 Clauses (1)(a) of the Explanation covered machinery, plant, equipment, apparatus etc. with specified heading number. Therefore, for the relevant period concerned the unamended provision should have been applied in the light of the decision relied on by the appellants.