VIKAS INDUSTRIAL GAS Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) M /s. Vikas Industrial Gas is manufacturing industrial gases at their factory located at Vikas Nagar, Pipri Singrauli Road, Renukoot. The water required for the factory are brought by pipe line from Rihang Reservoir. The distance between the factory and the water source is one Kilo Meter. At the reservoir they installed a new reciprocating buldozer pump in March 1996 for delivering water from the reservoir through pipe line to the factory. They claimed Modvat of the Central Excise Duty paid on the pump under Rule 57Q of the Central Excise Rules. The said rule allows Modvat credit on capital goods "used in the factory of the manufacturer". The Modvat credit was refused by Central Excise authorities in both original and appellate proceedings on the ground that under Rule 57Q credit of Central Excise duty on capital goods is available only in respect of capital goods installed in the factory premises. It was held that in the instant case as the party had installed the capital goods outside their factory, that too at a far -off place from their factory, they cannot get the benefit. The appellants had been contending unsuccessfully that the pump should be treated as installed within the factory in view of the enlarged definition of factory contained in the Section 2(e) of the Central Excise Act. They had relied on some case law also in support of their submissions. The matter has been referred to this Larger Bench by a Bench of Single Member who heard the appeal on account of the Difference of Opinion between two decisions reported in 1998 (99) E.L.T. 395 in the case of Madras Cements Ltd. v. C.C.E., Hyderabad and 1991 (55) E.L.T. 415 in the case of Associated Cement Co. Ltd. v. C.C.E.

(2.) WHEN the matter came up for hearing on 27 -3 -2000, none appeared for the appellant. They have desired that their case may be decided based on the written submissions filed by them. Accordingly, we are deciding this appeal after considering the written submissions of the appellant and after hearing the ld. DR for the Revenue.

(3.) THE submission of the appellant is that water is an essential input for the manufacture of gases and pumping of water from Rihand reservoir to the place of production of gas is an essential manufacturing process. They contended that the water lifting pump which was installed at the source for drawal of water at the Rihand reservoir and the pipeline are so intimately connected and integrated that the entire installation forms part and parcel of the manufacturing process of the appellant. With regard to the requirement under Rule 57Q that the capital goods must be "used in the factory", they have contended that definition of "factory" in Section 2(e) of Central Excise Act includes the location of pumping. They have submitted that the definition of factory is in two parts vis -a -vis first part covers "any premises, including the precincts thereof, wherein excisable goods are manufactured" and second part covers "any premises including precincts thereof, wherein any manufacturing process connected with the production of excisable goods is being carried on or ordinarily carried on". They have contended that the second part of the definition incorporated the concept of notional extension of factory premises and covers even places outside the factory premises, if any manufacturing process, connected with the production of excisable goods is being carried on there. They have submitted that the lower Central Excise Authorities have not taken into account the second part of the definition providing for notional extension of the factory premises while rejecting their claim on the ground that the pump is not "used in the factory". They have also relied upon the following decisions : -