HABASIT INKOKA P. LTD. Vs. CCE

JUDGEMENT

(1.) THE present appeal is directed against the Order -in -Appeal No. 83/2004 (SCN) TRY -II dated 31.3.2004 passed by the Commissioner of Central Excise (Appeals), Trichy upholding the Order -in -Original passed by the Deputy Commissioner of Central Excise, Coimbatore - II Division. The Order -in -original dealt with admissibility or otherwise of capital goods credit to the duty paid on a computer server, data cartridge storage unit and power box imported under Bill of Entry dated 21.8.2001 from Switzerland by M/s. Habasit Iakoka Pvt. Ltd. Coimbatore - 14. The appellant is engaged in the manufacture of synthetic sandwich spindle tapes and flat transmission belts falling under Heading 40.10 and 59.10 of the CETA respectively. The power box imported falls under Chapter 85 and the other items fall under Chapter 84. The goods falling under Chapter 84 and 85 are covered by the definition of capital goods as per Rule 2(b) of Cenvat Credit Rules, 2002 provided the same are used in the factory of the manufacturer of the final products and they are not equipments or appliances used in an office. The lower authorities held that the equipments are used in the office of the appellant. The appellant has prayed for setting aside the order of the lower appellate authority. As per the impugned order, the duty and penalty have already been paid partly under TR6 Challan and partly by reversal in the Cenvat account.

(2.) CANVASSING the appeal, the learned consultant Shri S. Kandasamy explained that the item called H/Net comprises an intranet server with accessories which can receive information from an exclusive global network of computers. The information contained in the systems can be shared only among the systems in the network. This network is called Hebasit network. The staff of each factory manufacturing synthetic sandwich spindle tapes and flat transmission belts employing the process owned by the Hebasit group can feed any useful information that can improve the efficiency of the process and so of each unit. Therefore learned consultant argued that as held by the Commissioner (Appeals), the equipment was useful in the manufacture of the final product of the assessee and was eligible for credit as capital goods.

(3.) HOWEVER , he agreed that the subject goods are kept on the first floor of the factory building where, other rooms occupied by the Managing Director of the company, accounting department, rooms of IT personnel, etc. are situated. The subject equipment is kept in an exclusive air -conditioned room on the first floor alongside these rooms. He requested that, even if the credit was not admissible, the penalty imposed may be vacated in view of the uncertainty as regards the eligibility of the item to capital goods credit that existed in the mind of the appellant.