MAIHAR CEMENT Vs. CCE

JUDGEMENT

(1.) The issue involved in this Appeal filed by M/s Maihar Cement is whether Modvat Credit is available to them in respect of welding Electrodes, Oxygen and DA Gas.

(2.) Shri Sanjay Grover, learned Advocate, submitted that use of welding electrodes, oxygen and DA gas is integral to the process of manufacture as these are required for repairing and remaking parts which get worn out; that oxygen and DA gas are used for removing worn out liner and welding electrodes are used for fittings new liners in Raw Mill; that without refurbishing of liners, the grinding activity will halt and hence there is direct nexus with the manufacturing process; that welding electrodes are also used in re -building of worn out parts such as, hammer, crusher, pre -heater in the kiln, crusher roller in the cement mill, etc. The learned Advocate relied upon the decision of the Larger Bench of the Tribunal in the case of CCE, Meerut I v. Modi Rubber Ltd., 2000 (70) ECC 444 (LB): 2000 (119) ELT 197, wherein the Modvat credit was allowed on lubricating oils and greases used in the machinery by holding that it is immaterial whether the goods are used in the machinery or for the purpose of the machinery. Reliance has also been placed on the decision in the case of Jawahar Mills Ltd. v. CCE, 1999 (108) ELT 47 and Associated Cement Companies Ltd. v. CCE, Belgaum, 1999 (108) ELT 477 wherein the Modvat Credit was allowed in respect of dissolved acetylene/oxygen used for refurbishing liners in Raw Mill and Cement Mill. He also mentions that the Tribunal in the case of Hindustan Development Corporation v. CCE, Calcutta -IV, 1999 (84) ECR 86 has allowed the Modvat credit on welding electrodes under Rule 57Q of the Central Excise Rules.

(3.) Countering the arguments Shri Rajiv Tandon, learned SDR, submitted that none of the products impugned can be treated as spares, components or accessories of the machine/machinery used for producing cement; that with effect from 27.3.96 welding electrodes and gas falling under Chapter 83 28/29 of the Schedule to the Central Excise Tariff Act have not been specified as capital goods under Rule 570 of the Central Excise Rules, 1944; that, therefore, they are not eligible capital goods in respect of which Modvat credit can be availed of. The learned SDR also submitted that in the case of Modi Rubber Ltd., Larger Bench of the Tribunal allowed the Modvat credit in respect of lubricating oils and greases as the use of those products increased efficiency of the machine/machinery; that in the present matter, the impugned items are used to repair the worn out parts which activity is not in or in relation to the manufacture of the finished goods.