CCE, RAIPUR Vs. MONNET ISPAT LTD.

JUDGEMENT

(1.) IN these appeals of the Revenue, the appellant is aggrieved by the order of the Commissioner (Appeals) allowing to the respondent Modvat credit of Rs. 5,141/ - on spare for S.M.B. Feeder and Rent spring held to be capital goods under Rule 57Q and another credit of Rs. 4,07,774/ - on 12 items held to be capital goods under the said Rule for the period April to September, 1994. The 12 items of capital goods on which the Modvat credit of Rs. 4,07,774/ - has been allowed by the lower appellate authority are named below: - -

(2.) LD . Advocate for the respondent submits that all the goods in question are covered by the definition of 'capital goods' under Clause (b) of Explanation (1) to Rule 57Q(1) of the Central Excise Rules, 1944 as the Rule stood during the material period. Ld. Counsel refers to the use of each of the goods as noted by the Commissioner (Appeals) and submits that the use clearly brings out the fact that the item is either component or spare part or accessory of one or the other machine, equipment, apparatus, tool or appliance used for the manufacture of the final products. He further submits that none of the uses noted by the lower appellate authority has been contested in these appeals. In relation to Leaf Spring [the item mentioned at Sl. No. (iv) in the above list] and the one in respect of which Modvat credit of Rs. 5,141/ - has been allowed by the Commissioner (Appeals), ld. Counsel relies on the Tribunal's decision in Rosa Sugar Works v. CCE, Kanpur (2001 (131) ELT 89 (Tribunal -Delhi). As regards the item mentioned at Sl. No. (ix) in the above list, ld. Counsel relies on the Tribunal's decision in Century Cements Ltd. v. CCE, Raipur (1997 (95) ELT 655 (Tribunal)).

(3.) I have considered the submissions. I note that, in view of the Supreme Court's decision in the case of CCE, Coimbatore v. Jawahar Mills Ltd. (2001 (132) ELT 3 (SC)), the question whether any goods is eligible as capital goods for Modvat credit under Rule 57Q of the erstwhile Central Excise Rules, 1944 has got to be resolved with reference to the use of the goods in the process of manufacture of final products in the factory of the assessee. The use of each of the goods as stated by the respondents has been noted by the lower appellate authority in its order. That authority's findings in relation to the use of the goods are not under challenge in the present appeals. I have examined the use of each item as noted by the Commissioner (Appeals) and I find that it qualifies the goods for Modvat credit under Rule 57Q. In respect of Static Converter, it has been stated that it forms a part of the rotary kiln. The Revenue has no case that the rotary kiln of the respondent is not a machine, machinery, plant, equipment, apparatus or the like. Therefore, the Static Converter, being a part of the machine, machinery, plant, equipment, apparatus or the like is covered by the expression "components, spare parts and accessories of machine, machinery, plant, equipment etc." in Clause (b) of Explanation (1) ibid and is eligible for capital goods credit. The same is the position of Spare Parts of Jaw Crusher inasmuch as the jaw crusher has been held to be used for crushing Iron ore/coal lumps into small sizes. As regards Spare for Impeller, it has been stated that it is fitted into shell air fan attached to the shell of rotary kiln. The shell air fan sucks air from atmosphere and supply the same into rotary kiln to facilitate burning of coal and generate carbon monoxide. The item thus forms a part of the rotary kiln, which is a machine, machinery, equipment or the like. Leaf Spring is a fitment of vibratory feeder which feeds the raw materials (iron ore, coal etc.) into the conveyor system which leads to the rotary kiln, thereby forming a part of the plant and machinery. The Electric Fan provides cool air through a duct so as to keep hydraulic cylinders etc. always cool without getting damaged. Electric Motor is mounted on the kiln to work the shell air fan. Thus the fan and the motor would fall under the expression "accessories" in Clause (b) of Explanation (1). ACC MON LC80 is stated to be a castable and used for inner lining of the kiln shell, thereby forming a part of the kiln. Center Disc has been held to be a spare part of raw material crusher, which crushes iron ore/coal lumps into small sizes fit for being fed into the kiln. Where the raw material crusher is a machine, machinery or the like, its spare parts will be immediately covered by Clause (b) of Explanation (1) ibid. Filter Bag and Timer Valve have been stated to be components of de -dusting system, which controls air pollution. If dust particles are not removed, it may result in accumulation of dust on the machinery and a stage may reach when the process of manufacture is rendered inefficient or inexpedient. Therefore, the said goods should be held to be necessary for the process of manufacture and hence eligible for capital goods credit. As regards Hammer and Tooth Ring, there appears to be no reference to the use of these items in the impugned order. However, in the order of the adjudicating authority, these goods have been held to be spare parts of jaw crusher. This finding of the original authority appears to have been upheld by the lower appellate authority. Moreover, this item has already been covered by item no (ii) [Spare parts of Jaw Crusher] mentioned in the list. The last item viz. Def. Plates are iron plates used for replacement of portions of the kiln shells and rotary cooler shells. The kiln and cooler having been accepted to be machines or machinery or the like, these plates will form 'parts' of machinery etc. and will be covered by Clause (b) of Explanation (1) ibid. The decision in Rosa Sugar Works (Supra) is clearly on the question whether plates, bars or rods used for repairing damaged parts of machinery can be held to be eligible capital goods under Rule 57Q. These items have been held to be eligible capital goods in the cited case. In Century Cements (Supra), dust collecting bags/filter bags used for collecting dust for prevention of air pollution have been held to be parts of the manufacturing plant and hence eligible capital goods under Rule 57Q. This decision appears to be supportive to the respondent's case in relation to Filter Bags & Timer Valve. The uses of the various goods not being under challenge, the goods in question must be held to be eligible capital goods and, accordingly, the order of the lower appellate authority has to be sustained. The appeals are rejected.