MANSURPUR SUGAR MILLS LTD. Vs. CCE

JUDGEMENT

(1.) IN these two appeals filed by the appellants against the above detailed orders -in -appeal, the facts and issue involved are common and as such are being disposed of by this single order.

(2.) THE issue involved in both the appeals relates to denial of Modvat credit on the parts and accessories of capital goods in the appellants. In appeal No. E/3229, the period involved is 2001 -2002. The Cenvat credit denied to the appellants to Rs. 2,28,027/ - and the items involved are M.S. Plates, Sheets, C.I. Drums as detailed in Annexure 'A' (24 in numbers, at page 20) appended to SCN. While in Appeal No. E/3509/04, the period in dispute is from May, 2002 to December 2002. The credit denied is of Rs. 2,44,979/ - and the items involved are almost the same inasmuch as appeal detailed in Annexure 'A' referred above appended to SCN.

(3.) I have heard both the sides and gone through the record. The appellants are engaged in the manufacture of sugar and molasses. The adjudicating authority disallowed the Mdovat credit on the items in question on the ground that these were parts of the machinery, falling under Tariff Heading 72 and as such were excluded from the purview of the capital goods as per Explanation I of Rule 57Q (now Rule 2(b) of Cenvat Credit Rules, 2002) whereas the Commissioner (Appeals) while affirming that order has disallowed the credit on another ground by holding that these items were of general use in the civil construction. But both the authorities below in my view have failed to appreciate the fact and the use of the items in dispute in plant and machinery installed by the appellants in their factory for the manufacture of sugar and molasses. They have ignored totally the chart submitted by the appellants in both the appeals wherein they have detailed the use of each and every items in dispute and even mentioned the place of their placement/affixation in the machines and machinery installed in the factory. After going through these charts, it is quite evident that these items are parts and accessories of the various machines and machineries installed by he appellants in the factory for manufacture of the sugar and molasses and they appellants have not used in any manner for use in the civil construction. Being parts and accessories of the capital goods of Chapter 84 of the Tariff, irrespective of their individual classification under Chapter 72, are eligible for Modvat credit, in view of the Board's circular No. 276/110/96 -TRU dt. 2.12.1996. In that circular the Board has given the clarification that all parts, components, accessories which are to be used with capital goods of Clauses (a) to (c) of Explanation I of Rule 57Q, and classifiable under any chapter heading, are eligible for availment of Modvat credit. The wording of this Rule 57Q has been now incorporated in Rule 2(b) of Cenvat Credit Rules, 2002 which defines capital goods.