COMMISSIONER OF C. EX. Vs. JCT LTD.

JUDGEMENT

(1.) REVENUE has preferred this appeal against the Order -in -Appeal No. 884/CE/CHD/2000, dated 25 -4 -2000 in which the Commissioner (Appeals) has allowed the Modvat credit of the duty paid on capital goods to the respondents, M/s. JCT Ltd.

(2.) WHEN the matter was called no one was present on behalf of the respondents nor was there any request for adjournment from them. We observe from the records that no one had appeared on behalf of the respondents earlier also as and when the appeal was posted for hearing. We, therefore, take up the appeal for disposal after hearing Shri Vikas Kumar, learned SDR, and after perusing the records.

(3.) THE learned SDR submitted that M/s. JCT Ltd. manufacture Cotton/Man -made yarn and fabrics; that both the lower authorities had allowed Modvat credit to the respondents in respect of Two For One Twister (TFO) for spun yarn which was used for twisting two parallel single ply yarn to convert the same into twisted double ply yarn; that the said process does not amount to manufacture as held by the Supreme Court in CCE, v. Banswara Syntex Ltd., 1996 (88) E.L.T. 645 (S.C.); that as such TFO is not used for producing or processing of any goods or for bringing about any change in any substance for manufacture of the final products; that accordingly the TFO does not come within the purview of "capital goods" as defined in Explanation to Rule 57Q of the Central Excise Rules, 1944. He, further, submitted that twisted yarn is also exempted from payment of Central Excise duty under Notification No. 8/96 -C.E., dated 3 -7 -96 and in terms of Rule 57R of the Rules Modvat credit is not available if the capital goods is used in the production of final products which are exempted from payment of duty. He finally mentioned that the Revenue has filed a Reference Application against the Tribunal's decision in the case of CCE, Chandigarh v. M/s. Birla VXL Ltd., Final Order Nos. A/1140 -41/99 -NB (DB), dated 3 -12 -99 which is pending in the Punjab and Haryana High Court.