COMMISSIONER OF C. EX. Vs. WINSOME SPINNERS LTD.

JUDGEMENT

(1.) THE respondents are engaged in the manufacture of yarns falling under Chapters 52 and 55 of the Schedule to the Central Excise Tariff Act and are availing Modvat credit facility in respect of capital goods under Rule 57 -Q of the Central Excise Rules, 1944. The Department alleged that the party had wrongly availed Modvat credit amounting to Rs. 1,39,802/ - on certain goods i.e. automatic data processor, metal flexible and elbow fitting etc. treating the same as capital goods under Rule 57 -Q ibid in the months of December, 1995 and accordingly issued show cause notice to them proposing to recover the aforesaid amount and also to impose penalty. In adjudication of the show cause notice, the Assistant Commissioner of Central Excise disallowed the above Modvat credit and confirmed the demand of the aforesaid amount and also imposed penalty of Rs. 20,000/ - on the respondents. In the appeal filed by the party against the order of the Assistant Commissioner, lower appellate authority reversed the adjudicating authority's finding and allowed the above Modvat credit and also set aside the penalty. The Revenue has filed the present appeal against this order of the lower appellate authority, pleading, inter alia, that the aforesaid goods did not contribute "anything to bring about any change in any substance or material characteristic of raw material in its transformation to final product". "Moreover, this item is a part of automatic data processing machine and not plant and machinery used for production of final product" (vide Ground (i) of the Grounds of Appeal). The Revenue has further relied on the decision of the Hon'ble Supreme Court in the case of Annapurna Carbon Ind. Co. v. State of Andhra Pradesh 1976 (37) STC 378 (S.C.) and has contended that the aforesaid items cannot be termed as part or accessory of any capital goods.

(2.) I have heard the learned JDR, Shri S. Ramanathan for the appellant/Revenue and the learned Advocate, Shri Balbir Singh for the Respondents. I have also carefully considered the orders of both the lower authorities and connected records of the case.

(3.) IT is apparent on the face of the impugned order that the function's of the goods under consideration were duly considered and appreciated by the lower appellate authority and that, on the basis of such appreciation, the lower appellate authority has held the said items to be covered by the expression of 'capital goods' under Rule 57Q ibid. I also come across a written submission of the respondent amongst the records of the case, wherein the function of the goods in question have been explained as follows : -