VASAVADATTA CEMENT Vs. COMMISSIONER OF CENTRAL EXCISE, BELGAUM

JUDGEMENT

(1.) THIS appeal arises out of and is directed against the impugned order dated 27 -11 -2001 passed by the Commissioner of Central Excise, Belgaum.

(2.) THE appellants are engaged in the manufacture of cement and clinker falling under Chapter 25. The appellants for enhancing the capacity of generation of electricity, entered into an agreement with M/s. Modi Mirrlees Blackstone Ltd., (MMBL) for the erection, installation and commissioning of the Generating Set for generation of electricity which was called as DG set. The appellants filed declarations under Rule 57T(1) for the capital goods to be received in the factory and accounted for all these items in Part -I and availed the credit in RG 23C, Part -II during May, 1999. The appellants were served with a show -cause asking why the credit of Rs. 1,41,99,862/ - availed on the capital goods should not be disallowed as the DG set as per the terms of agreement was manufactured by MMBL and not by the appellants and therefore, the appellants were not entitled to avail the credit. The Show -cause notice was duly replied by the party contending that activity of assembling of the components, parts on cement concrete foundation for DG set was not manufacturing activity under Section 2(f). Further it was submitted that the erstwhile Rule 57Q only provided that the credit is entitled under this Rule if the items are used in the factory of manufacturer of final product. The Commissioner who adjudicated the proceedings did not accept the contention of the party and accordingly confirmed the demand of Rs 1,41,99,862/ - and imposed an equivalent penalty under Rule 57 -AH(2) read with Section 11AC and also imposed penalty of Rs. 5 lakhs under Rule 173Q and demanded interest under 173 -H(1) read with Section 11AB.

(3.) SHRI Chandra Kumar learned Senior Counsel appearing for the appellants submitted that in the above facts and circumstances whether appellants are entitled to take Modvat credit on DG set and parts thereof is an issue to be considered herein. Shri Chandra Kumar submitted that the issue involved herein has already been considered by the Tribunal in the case of Aditya Cement Ltd., as per final Order No. A/369/02 -NB, dated 06 -03 -02 in appeal No. E/2278/01 -NB (D). To emphasise the fact that the facts of this case are similar to his case he referred to the paras 2, 3, 4, and 5 of the Order which read as under :