FLEX CHEMICALS LTD. Vs. CCE

JUDGEMENT

(1.) In this Appeal the issue involved is whether the MODVAT credit of the duty paid on air conditioning machine is available to M/s. Flex Chemicals Ltd.

(2.) Shri Arvind Arora, learned Company Representative, submitted that the Appellants manufactured printing ink and adhesives; that the Commissioner (Appeals) in the impugned Order has disallowed the MODVAT credit of the duty paid on split air conditioning machines on the ground that air conditioners used for controlling temperature and humidity is not capital goods relying upon the decision of the Tribunal in the case of CCE v. Fords (India) Lab Ltd. 1997 (92) ELT 232 (Tri) and CCE v. Titan Industries Ltd. . He, further, submitted that the issue involved is no more res integra in view of the decision of the Larger Bench of the Tribunal in the case of Jawahar Mills v. CCE, Coimbatore which has also been affirmed by the Supreme Court in the case of CCE v. Jawahar Mills ; that it has been held by the Larger Bench in Jawahar Mills case that the expression, "used for producing or processing" in Explanation (1)(a) to Rule 57Q which defines capital goods would not be limited to machineries used in the process or directly or actually needed for turning out or for creation of the goods; that it is not in dispute that the impugned air conditioning machines have been used by them in their factory for maintaining requisite atmosphere and temperature which is essentially required for manufacturing their final products; that during the manufacturing process of their final product various types of chemical reactions take place among the inputs and for this purpose individual chemicals require certain temperature in order to complete their reactivity with the other chemicals resulting in emergence of printing ink and adhesives; that accordingly, the Air conditioning machines help in maintaining the requisite atmosphere and temperature which is essentially required for the manufacture of their final products. He further mentioned that the Tribunal in the case of Hindustan National Glass and Industries Ltd. v. CCE, New Delhi -III 2002 (115) ELT 570 : 2002 (105) ECR 121 (T) has allowed the MODVAT credit in respect of air conditioners. Reliance has also been placed on the decision in the case of Aksh India Ltd. v. CCE, Jaipur 1992 (35) RLT 611 and CCE, Chennai v. Spic Pharmaceuticals Division 2001 (138) ELT 929 (Tri).

(3.) Countering the arguments Shri H.C. Verma, learned Departmental Representative, reiterated the finding as contained in the impugned Order and emphasised that the Commissioner (Appeals) has relied upon the two decisions of the Tribunal under which MODVAT credit has been denied in respect of air conditioners. In reply the representative of the Appellant Company submitted that Commissioner (Appeals) in the impugned Order, has relied upon the decision in the case of CCE v. Shanmugaraja Spinning Mills Pvt. Ltd. ; that the Larger Bench of the Tribunal in the case of Jawahar Mills has held that the decision in CCE v. Shanmugaraja Spinning Mills Pvt. Ltd. to the effect that humidifiers are not used in the manufacture of textiles is not a proper view.