MADRAS CEMENTS LTD. Vs. CCE

JUDGEMENT

(1.) THE short question arising for consideration in this appeal is whether capital goods credit is admissible to the appellants in respect of certain items claimed to be eligible capital goods, under Rule 57Q of the erstwhile Central Excise Rules, 1944. The lower appellate authority denied this benefit to the party in respect of the following six items:

(2.) IT is submitted by ld. consultant for the appellants that the credit taken on the last item mentioned above has been reversed to the extent of Rs. 18,028/ - disallowed by the lower authorities and that the appellants have no grievance in this regard. As regards Surface Miner and Spares therefor, it is submitted that these were used in a captive mine in connection with mining of limestone required for the manufacture of cement (final product). It is submitted that credit on these items is admissible to the appellants as held by the apex court in Vikram Cements v. CCE Indore 2006 (197) ELT 145 (SC), wherein it was held that MODVAT credit on capital goods used in captive mine was admissible to the cement manufacturer. In respect of accessories to DG set, it is submitted that DG set was part of a captive power plant and, therefore, accessories thereto were eligible for capital goods credit under Rule 57Q as this rule stood at the material time. In respect of spare parts for road milling machine, it is submitted that MODVAT credit on these items is admissible to the appellants in terms of Board's -TRU dated 2.12.96, wherein the provisions of Rule 57Q w.e.f 23.7.96 were examined and it was clarified that, where credit was available to specified capital goods under the Rule, it was also available to components, spares and accessories of such capital goods irrespective of their classification. In respect of screws, clip plates etc., it is claimed that these items, which are found to have been used as accessories to main machinery falling under Heading 84.30, are also eligible for capital goods credit as they were used in connection with the manufacture of cement.

(3.) AFTER considering the submissions, we find that, in order to allow capital goods credit on Surface Miner and Spares therefor, it requires to be established that the limestone mines, in which these items were used during the period of dispute, are captive mines. Neither of the lower authorities has entered any finding on this aspect. As regards accessories to DG sets, we note that DG set has been accepted as part of the plant and machinery. It is further noticed that, under Rule 57Q as amended by Notification No. 11/95 -CE (NT) dated 16.3.95, electric generating sets were specifically mentioned for the benefit of credit and further that components, spare parts and accessories of such specified goods were also mentioned for the same benefit. Therefore, accessories to DG sets received in the appellants' factory in May' 96 were eligible for capital goods credit. In so far as spare parts for road milling machine are concerned, however, the position is different inasmuch as the eligibility of these items for capital goods credit has to be examined with reference to Rule 57Q as further amended by -CE (NT) dt. 23.7.96. We find that, under the provision so amended, goods falling under Heading 84.31 were not eligible for capital goods credit and, consequently, spare parts of such goods were also ineligible.