NAGARJUNA AGRICHEM LTD. Vs. CCE, VISAKHAPATNAM

JUDGEMENT

(1.) THE dispute in this case is about the eligibility of certain storage tanks to modvat credit.

(2.) These tanks are made of steel and they have a lining of polypropylene fiber or reinforced plastic. The credit has been denied on the basis that these are used only for storage of goods and are therefore not taking part in the manufacturing process. Learned Counsel for the appellants submitted that storage of materials is an essential part of production process and therefore storage tanks participate in production and are eligible for modvat credit. He also referred to the decision of this Tribunal in the case of Hindustan Lever Limited v. CCE Mumbai -VII, : 2001 (137) ELT 841 wherein the Tribunal specifically held that storage tanks are covered under the definition of "capital goods" and eligible for credit. The opposing contention of the revenue is that only machine, machinery and apparatus taking direct part in production are eligible for modvat credit. Learned SDR referred to the decision of the Tribunal in the case of HEG Limited v. CCE Indore, : 2001 (127) ELT 235 wherein the Tribunal has held that high vacuum cryogenic container of aluminium is not eligible for modvat credit as capital goods.

(3.) STORAGE and transmission of inputs, materials under process and final Products are essential for any successful completion of manufacturing activity. The storage tanks used for this purpose are therefore essential capital goods. Capital goods in their common parlance include all assets of a manufacturing unit in contrast to inputs consumed and goods produced by them. In the present case, there is no dispute that these storage tanks are their capital assets inasmuch as they are repeatedly used in the manufacturing process. The decision of this Tribunal in the case of Hindustan Lever Limited applies to the appellant's case and is in their favour. In the case of HEG Limited the Tribunal has observed that the aluminium container is used for storing the chemicals used in testing laboratory. The finding of the Tribunal in that case, thus, would appear to be that the container in question was not taking part in the manufacturing activity. The decision of the Tribunal in HEG Limited is therefore, distinguishable. In view of what has been stated above, the appeal is allowed with consequential relief, if any, to the appellants.