C.C.E. Vs. STERLITE INDUSTRIES (INDIA) LTD.

JUDGEMENT

(1.) THIS appeal has been preferred by the Revenue against the order -in -appeal dated 22.9.1999, partly allowing the appeal and holding that modvat credit was eligible on pipes and fittings, cables, control panels, electric insulator, pumps and thereby confirming the eligibility of credit in respect of items other than LPG storage tank.

(2.) A show cause notice was issued on 11.10.1996 on the respondent - assessee proposing to disallow modvat credit on the capital goods to the tune of Rs. 62,86,987/ - under Rule 57Q of the Central Excise Rules, 1944 read with Section 11A of the said rules. According to the Revenue, the assessee had received certain capital goods, namely, tanks, vessels, pipes and fittings, panels, cables, insulators, switch boards, pumps, electrodes under cover of valid duty paying documents and had availed modvat credit on capital goods during the period from May 1996 to July 1996. It was alleged in the show cause notice that modvat credit was not admissible because, these capital goods were not used for producing or processing the final product, manufactured in the said factory, nor were they parts, components or accessories of the machines and machineries, defined as capital goods at the relevant time.

(3.) THE adjudicating authority held that the pipes and fittings were used to lead liquid at certain places, the cables were used to lead electric supply to the machineries, the pump was used to draw liquid from the bottom to upper stage, and like wise, all the goods were used for the purpose, different than the manufacturing process of the final product and that they were not used for bringing about any change in the substance of the materials. The credit on all these goods was, therefore, disallowed on the ground that they were neither machines and machineries, equipments, apparatus etc. nor parts thereof, as contemplated by the provisions of Rule 57Q of the rules.