NAHAR SPINNING MILLS Vs. CCE, BHOPAL

JUDGEMENT

(1.) The appellants are manufactures of cotton and blended yarn falling under Chapters 52 and 55 of the Schedule to the Central Excise Tariff Act and are availing the facility of modvat credit on inputs and capital goods under Rules 57A and 57Q of the Central Excise Rules. During the period February to April 1997, they took modvat credit of the duty paid on certain goods which were claimed to be either inputs or capital goods covered by Rule 57A or Rule 57Q, as the case may be. Among such goods were lubricating oils which were claimed to be inputs and computer hardware which were claimed to be capital goods. The modvat credit taken on these goods were disallowed by the adjudicating authority, who also imposed a penalty of Rs.5,000/ - on the party.The order of the adjudicating authority was upheld by the Commissioner (Appeals) in the appeal filed by the assessees. Hence the present appeal of the assessees before the Tribunal .

(2.) Today there is no representation for the appellants in spite of notice. The Revenue is represented by Ld. SDR Sh.Bheema Shankar.

(3.) I have carefully examined the records. I find that both the lower authorities disallowed the modvat credits taken on lubricants (as inputs) and computer hardware (as capital goods) on the ground that the goods did not quality to be inputs or capital goods, as the case may be, under the provisions of Rule 57A or Rule 57Q, as the case may be. As regards lubricants, the lower appellate authority found that the lubricants were used for maintenance and smooth running of machinery (capital goods) and, therefore, could not be treated as the same were not used in relation to he manufacture of final products. According to that authority, any goods used for maintenance of capital goods would not qualify as inputs used in relation to the manufacture of final products. Regarding modvat credit on computer hardware, it was found that the goods were in the excluded category of capital goods under Rule 57Q inasmuch as they fell under Chapter Headings 84.71 and 84.73 and, therefore, it was held that such goods were not eligible for capital goods credit under Rule 57Q.