LAWS(CE)-2004-7-176

KESORAM CEMENT Vs. COMMISSIONER OF CENTRAL EXCISE, HYDERABAD

Decided On July 02, 2004
Kesoram Cement Appellant
V/S
COMMISSIONER OF CENTRAL EXCISE, HYDERABAD Respondents

JUDGEMENT

(1.) THIS appeal arises from Order -in -Appeal No. 4/02, dated 3 -1 -2002. The issue before the Commissioner was with regard to eligibility of Modvat credit on air -conditioners, dumpers, excavators and rebars under Rule 57U of Central Excise Rules, 1944.

(2.) LD . Advocate submitted that air -conditioners were used in the instrumentation room. The instrumentation room had been fitted with controlling equipment for manufacture of cements and therefore it has to be considered as one used for the manufacture of the final product and hence the benefit of Modvat credit is required to be extended. He has relied on large number of judgments on the issues which are involved in this matter. He admitted that dumpers and excavators were used in the mines but it is his contention that they were used for lifting the raw material from the mines to the factory and hence they should be given the benefit of Modvat credit. So also with regard to rebars the same are used for the foundation purpose to lay the machineries. Hence, they should be given the benefit of Modvat credit. In this regard, he relied on the judgments rendered by the Tribunal on various aspects on which it was felt that Modvat credit is required to be extended if rebars are used for the purpose of protecting the machinery and in the operation of the machinery as held in the case of Lloyds Metals and Engineers Ltd. v. CCE, Nagpur [2003 (162) E.L.T. 847 (T) = 2003 (59) RLT 342] and that of United Phosphorous Ltd. v. CCE, Vadodara [2002 (150) E.L.T. 650]. He also submitted that penalty is not leviable under Rule 173Q on the allegation of inputs if the credit was wrongly taken in respect of goods used for repair and maintenance of machinery and plant. He relied on the Larger Bench judgment in the case of Jaypee Rewa Plant v. CCE, Raipur [2003 (159) E.L.T. 553 (Tri. - LB) = 2003 (57) RLT 739]. He submitted that there was a genuine belief in the light of a sum of judgments of the Tribunal to avail the benefit and hence penalty cannot be imposed. He also relied on the judgment rendered in the case of Finolex Cables Ltd. v. CCE, Pune [2003 (59) RLT 340], Manikgarh Cement v. CCE, Nagpur [2003 (159) E.L.T. 1120 (T) = 2003 (58) RLT 678], Jaypee Bela Plant v. CCE, Raipur [2003 (161) E.L.T. 422 (T) = 2003 (57) RLT 265] and Mangalam Cement Ltd. v. CCE, Jaipur [2004 (163) E.L.T. 177].

(3.) LD . SDR pointed out that the air -conditioner was not used for manufacture of the cement which was not installed in the production room to maintain the temperature but for the purpose of manufacture of cement. Hence, the judgments relied by the Counsel wherein the air -conditioners had been setup to maintain the temperatures for production is distinguishable. He relied on the judgment rendered by the Tribunal in the case of Usha Ispat Ltd. v. CCE, Pune [2000 (125) E.L.T. 1184] wherein the air conditioner was noted to be not used directly or indirectly for the production of pig iron but is used for peripheral purpose. He submitted that in the present case admittedly air -conditioners were installed in instrumentation room which was not part of the production of cement. With regard to dumpers and excavators he submitted that they are used in the mines outside the factory and they are not eligible for benefit as capital goods in terms of Larger Bench judgments in the case of Madras Cements Ltd. v. CCE, Hyderabad [2003 (158) E.L.T. 293 (Tri. - LB) = 2003 (56) RLT 978]. He also pointed out that the rebars were not used to cover the machinery or to protect the machinery and as they were used for civil work they are not eligible for benefit of Modvat credit.