CCE Vs. T.I.S.C.O. LTD.

JUDGEMENT

(1.) THE issue involved in this appeal filed by the Revenue is whether capital Goods Credit is available to M/s. TISCO Ltd. under Rule 57Q of the Central Excise Rules in respect of unfired refractory bricks and mortar, during the period from 1.7.1996 to 22.7.1996. Briefly stated the facts are that the Assistant Commissioner disallowed the Capital Goods Credit holding that refractory bricks were used as lining material in the inner surface of the furnace for protection of furnace and other equipments where molten iron was handled; that it was used as heat resistant and corrosive resistance lining; that the mortar was charged into the furnace as filling material to seal the crevices in the refractory walls of the furnace to prevent leaking of the liquid metal from the furnace; that these impugned products did not qualify as machine/machinery and were not used for producing or processing or bringing about change in any substance; that these are used as construction material and did not have any role which contributed to production, etc. On appeal filed by M/s. TISCO Ltd., Collector (Appeals) allowed the appeal holding that there could be no furnace without refractory bricks; that refractory bricks are part of the furnace and without the furnace iron could not be heated to a degree where it would become liquid molten iron and furnace with the refractory bricks are very much part of the plant.

(2.) SHRI H.K. Sharan, learned S.D.R., submitted that the refractory bricks/mortar are only used for upkeep of the furnace and there is no other use of the same; that refractory bricks falling under Chapter 69 of the Schedule to the Central Excise Tariff Act were eligible to capital goods as per amendment made in Explanation to Rule 57Q by Notification No. 11/95 (NT) dated 16.3.1995; that the impugned refractory bricks and mortar fall under Chapters 68 and 38 respectively; that Patna Commissionerate Trade Notice No. 48/4.M.P./88 dated 6.3.1988 relied upon by the respondents, does not help their case as the word, 'Machinery' used in the Trade Notice referred to furnace and not the refractories; that refractories by no stretch of imagination would qualify to be called either 'machinery' or part of machinery. The learned S.D.R. emphasized that the impugned goods are construction material and as per Supreme Court's decision in J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. Sales Tax Office reported in, 1997 (91) ELT 34 (SC), building material used for construction of 'plant' cannot be said to be used as plant in the manufacture of goods. Reliance was also placed on the decision in the case of Steel Authority of India Ltd. v. Collector of Central Excise reported in, 1989 (42) ELT 89 (T). He also contended that the impugned materials are being replaced periodically to save the furnace and this use of maintaining and upkeeping of furnace cannot make the refractory materials as components of the furnace.

(3.) IN reply, the learned D.R. submitted that the substituted Explanation to Rule 57Q is not clarificatory in nature and the Tribunal in Modi Alkalies case reported in, 1996 (88) ELT 555 (T) :, 1997 (68) ECR 120 (T) has held that the amendment brought out by Notification No. 14/96 (NT) was not retrospective in effect. He further submitted that when a specific mention is made on the Notification itself about its effect, any goods, brought into the factory before the amendment, will not be eligible for capital goods. He relied upon the judgment in the case of Cannanore Spinning Mills case reported in, 1978 (2) ELT 1375 (SC) :, ECR C 334 (SC). Finally, he mentioned that Larger Bench in Jawahar Mills Ltd. v. Collector of Central Excise reported in, 1999 (32) RLT 379 (T) has held that the issue as to whether the amendment effected in Notification No. 11/95 and 14/96 -(NT) is retrospective, becomes academic and the matter is to be decided according to the language of the provision as it stood at the material time and the Department had shown that the impugned goods were not capital goods according to the language of Rule 57Q as it stood at the material time. The learned Advocate, appearing on behalf of the respondents, submitted that the Larger Bench of the Tribunal in Jawahar Mills case, supra, has clearly held in para 41 of the decision that - "the items which are recognised as eligible to Capital Goods Credit by Notification No. 14/96 are items covered by Explanation 1(a) and it cannot be contended by the Revenue that these items are not covered by the Headings mentioned in Notification No. 14/96 or that the items are not capital goods within the meaning of Explanation 1(a) under Rule 57Q as it stood during the relevant period." He contended that this clearly shows that whatever was considered to be capital goods as per Notification No. 14/96 are capital goods as per Explanation 1(a) to Rule 57Q at the relevant period.