M/S GRASIM INDUS. LTD. Vs. CCE, INDORE

JUDGEMENT

(1.) THE controversy involved in this appeal relates to the availability of modvat credit to the appellants on capital goods i.e. (1) Chlorine cylinder and spares thereof; (2) Copper winding wire; (3) Rubber mat control room switch gear; (4) Welding Electrode; (5) Static Converter; (6) Acrylate/Hylac or Resin; and (7) M. Seal. The appellants claimed modvat credit on these goods to the tune of Rs 10,95,949/ -, but the Commissioner, who adjudicated the issue, disallowed the same and imposed penalty of Rs 1 lakh on the appellants by holding that these goods did not fall within the definition of 'Capital Goods' under Rule 57 -Q of the Central Excise Rules, 1944.

(2.) ON the other hand, the learned SDR has contended that for claiming modvat credit, the goods must satisfy either of the three conditions embodied in Explanation I appended to Rule 57 -Q of the Rules, and since the goods in question did not satisfy any of these conditions, the Commissioner has rightly disallowed the modvat credit in respect thereof.

(3.) WE have heard both sides and gone through the record. In the case of CCE, Indore vs Surya Roshini Ltd., supra, the Five Member Larger Bench of the Tribunal while considering the correctness of the ratio of the law laid down in the case of Jawahar Mills Ltd. vs CCE, Coimbatore, supra, regarding the capital goods, has observed that the goods shall qualify for modvat credit, only if they fall under any of the three clauses of Explanation I of Rule 57 -Q of the Rules as it stood at the relevant time. In that case, the Bench had taken into account the law earlier laid down by the Three Member Bench of the Tribunal in the case of Jawahar Mills Ltd., supra. But on a bare perusal of the impugned order, it is evident that the learned Commissioner has not examined the nature of the goods from that angle. He has not given definite findings that the goods in question did not satisfy any of the three conditions mentioned in Explanation I of Rule 57 -Q of the Rules. We are, therefore, of the view that the matter needs re -examination at his end being a question of fact. Even the learned counsel has very fairly conceded that the matter be sent back to the adjudicating authority for fresh decision in the light of the ratio of the law laid down in the case of CCE, Indore, vs. Surya Roshini Ltd., supra, and other cases relied upon by him, and referred to above. His request has not been contested by the learned DR.