MICO Vs. COMMISSIONER OF CENTRAL EXCISE, BANGALORE

JUDGEMENT

(1.) WHETHER Computer hardware system which was used in ZEISS 3 D Co -ordinate Measuring Machine should be treated as eligible capital goods or not in terms of Rule 57Q is an issue to be considered herein.

(2.) THE authorities below have taken the view that the item in question was not used directly in connection with the manufacture of the finished products. They are also of the view that this cannot be said to be a measuring, checking or testing instrument. According to them if it is a measuring, checking or testing instrument and is directly connected with the process of manufacture only then it is eligible for Modvat credit.

(3.) SHRI Rajesh Chandra Kumar drew my attention to the write -up wherein the item in question has been specifically used in connection with the ZEISS 3D Co -ordinate Measuring Machine. He also referred to the detailed reply given to the Show -cause notice. He contended that since the item was used in ZEISS 3D Co -ordinate Measuring Machine, it should be treated as eligible capital goods in terms of Rule 57Q. He also said that it is not possible for the party to manufacture the goods in question without the aid of the Computer. He also submitted that it is a settled law that manufacture of goods should normally encompass the entire process carried on for converting raw material into finished goods. Where any particular process is so integrally connected with the ultimate production of goods that, but for that process, manufacturing or processing of goods would be commercially inexpedient, articles required in that process would fall within the expression, in the manufacture of goods. In the instant case item in question was integrally connected with the ultimate production of goods and accordingly item is eligible capital goods in terms of Rule 57Q of the Central Excise Rules. In support of his contention he referred to the decision of Tribunal in the case of CC, Chandigarh v. Steel Strips Ltd. reported in 2000 (116) E.L.T. 49. In that case it was held that computer hardware installed with Baird Direct Reading Vacuum Emission Spectrometer for analyzing report of sample testing of raw materials being used in manufacturing process eligible to benefit of Modvat credit in terms of Rule 57Q(1) of Central Excise Rules, 1944.