HOTLINE GLASS LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THIS appeal is filed against the order in appeal dated 9th December, 2003 that upheld the order in original denying the Modvat credit to the appellants and imposing penalty.

(2.) THE relevant facts that arise for consideration is that the appellant is a manufacturer of picture tubes. For the purpose of manufacturing picture tubes, they were required to install a furnace wherein inputs were to be melted. For manufacturing and fabrication of furnace, the appellants procured bricks, jointing cement and other items. As Central Excise duty was paid on all these items, the appellants availed Modvat credit on these items on duty paying documents during the period April to August, 2001 as inputs.

(3.) REVENUE issued show cause notice to the appellants seeking to deny the Modvat credit to the extent of 50% on the ground that refractory and refractory materials are covered under the head capital goods and hence appellants are eligible to avail only 50% of duty as Modvat credit. The appellants resisted the show cause notice on the ground that these bricks, refractory materials etc. are inputs for the manufacture of furnace within the factory premises and hence they have correctly availed the Modvat credit as inputs. The adjudicating authority confirmed the demand and also imposed penalty. On appeal, Commissioner (Appeals) also concurred with the findings of the adjudicating authority. Hence this appeal. Considered the submissions made at length by both the sides. I find from the record that the appellant had filed a classification declaration under Rule 173 -B as regards the fabrication/manufacturing of furnace in their factory. The appellant has also made a declaration in the said classification to the effect that the said furnace will be used within the factory for use in or in relation to the manufacture of final product which is dutiable. After filing the declaration, the appellant availed credit on the items like bricks, refractory, joining cement etc. as inputs. The provisions of Rule 57 -AA of Central Excise Rules, 1944 during the relevant period, defines the capital goods and inputs as under: