CHEMPLAST SANMAR LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE lower appellate authority denied capital goods credit on two items to the assessee for the period July, 1996. These items are (i) Flexible mounting and (ii) Flexible connector. The assessee had claimed these items to be accessories for the Diesel Generating sets of their captive power plant. Ld. Commissioner (Appeals) did not accept this claim. She held that these goods, being in the nature of structural used for visual inspection, could not be considered as components/accessories of the captive power plant. Accordingly, capital goods credit was denied to the assessee in respect of these two items.

(2.) AFTER examining the records and hearing both sides, I find that the 'Flexible mounting' was a hardened rubber pad of rectangular shape, offering about 50,000 60,000 hours of service. Ld. Counsel has submitted, in reply to a query, that their captive power plant had been working continuously without any breakdown. In such a situation, the rubber pads would have been in continuous use for about six years before their replacement. Therefore, these items did not merit consideration as consumables. These were, therefore, to be treated as capital goods. It appears from the write -up filed by the Counsel that these rubber pads were used as mounting for DG sets so that the transverse vibrations, in action, of the DG sets could be substantially absorbed. Without these flexible mountings, the DG sets would generate transverse vibrations with undesirable results. Hence it has to be held that the Flexible mountings were used as accessories to the DG sets of the captive power plant. The Revenue has no case that the captive power plant was not an eligible capital goods under Rule 57Q of the Central Excise Rules, 1944 in July, 1996. Hence, accessories to the power plant should also be held to be eligible for capital goods credit in terms of Clause (b) of Explanation 1 to Sub -rule (1) of Rule 57Q ibid as the Rule stood during the period of dispute.

(3.) THE write -up submitted by Counsel also indicates that the Flexible connectors were also used as fittings to the DG sets to ensure continuous running of the power plant without breakdown due to transverse vibrations and torque. It is not difficult to find that these items were used as accessories to the power plant and hence these items were also eligible for capital goods credit.