1. These appeals are directed against Order-in-Appeal dated 30.4.2004.
Appeal No. E/3504/04 is filed by the assessee, while appeal No.E/4096/04 is filed by the department.
2. The assessee has filed appeal against denial of Modvat Credit on the following items: While the department is challenging the impugned order for allowing credit on cement, bitumen and M.S.Angles.
3. Heard both sides and perused the record. Let me first take up the assessee appeal for disposal. The assessee is challenging the denial of Modvat Credit on above items. From the perusal of the record I find that the Modvat Credit on Inerts & Springs, Ceramic Fibre, Enklon N.68, and Cable Glands are permissible to the appellants/assessee. These items are used by the appellant in their factory in relation to the manufacture of their final product. I find from the record that without Inerts & Springs, catalysts which are added by the appellants during the manufacture, would not be possible.. Ceramic Fibre is used for covering of the pipeline, which transfers the processed/unprocessed material from one reaction vessel to another reaction vessel. The Ceramic Fibre is used to maintain heat in the pipeline while material is being transferred in the pipeline. Enklon No. 68 is oil which is used as lubricating oil used in pumps. Cable Glands are parts of electrical installation which joins the cables carrying electricity. It is settled law that any item which is used in the factory in or in relation to the manufacture of final product Modvat credit is not deniable. From the above it can be seen that the inputs/material are used by the appellant's factory and these items are required by them for manufacturing of final product.
4. The appellant's challenge on Modvat credit on Laboratory equipment is misplaced. It is common knowledge that equipments which are used in the laboratory and more specifically in R & D laboratory do not play any role in the manufacturing. Further, I find from the record that laboratory equipment on which Modvat is sought to be denied are laboratory furniture, and lab exhaust etc., it cannot be said by any stretch of imagination that laboratory furniture and lab exhaust take part in manufacturing of the final product. The appellant's appeal as regards denial of Modvat credit on laboratory furniture is rejected while appeals as regards to item Nos. 1, 2, 3 & 5 are allowed.
5. I find from the record that the adjudicating authority as well as appellate authority has observed that M.S. angle Modvat Credit is availed, in fact, are used in jointing & connecting M.S. pipes. The department is challenging the said finding on the ground that these M.S. Angles do not participate in production or manufacturing of goods.
It is settled in the case of CCE, Coimbatore and Ors. v. Jawahar Mills Ltd. 2001 (45) RLT 739 that any item which are used in or relation the manufacture of final product, credit is to be allowed. To my mind the appellate authority has correctly allowed Modvat Credit of M.S. Angle, and therefore, I do not find any merit in the department's appeal.
6. As regards the credit on cement and bitumen I find that the Commissioner (Appeals) has relied upon the decision of the Tribunal in the case of Lloyd Metals & Engineers Ltd. v. Addl. CCE, Nagpur, as reported at 2003 (59) RLT 342. Both the lower authorities have observed that use of cement is for laying foundation for installation of plant and machinery and the bitumen is used for water proofing. The Tribunal has held in the case of Lloyds Metals as follows: 2. I have heard Shri V.K. Jain, ld. C.A. for the appellants and Shri Uma Shankar, SDR for the Revenue and record my findings herein below: Cement is used in civil construction work for laying foundation for setting up machines. In the assessees' own case Order Nos.
C.I1/1384-90/WZB/2003 dated 13.6.03 capital goods credit has been extended to cement following the ratio of the decision of the Supreme Court in the case of Jawahar Mills Ltd. upholding the Tribunal's decision in which it was held that the definition of capital goods in Rule 57Q is very wide. The contention of the ld. SDR that building material used as raw material for construction of plant cannot be said to be used as plant in the manufacture of goods, so as to qualify under Section 8(3)(b) of the Central Sales Tax act, 1956, relying upon paragraph 20 of the Larger Bench decision in the case of Jawahar Mills Ltd. reported in 1999 (32) RLT 379 (CEGAT-L.B.) : RLT (L.B.-CEGAT) - 1274, is required to be rejected, as in paragraph 29, the Larger Bench has categorically held that the expression employed in Rule 57Q is even wider than the expression contained in Section 8(3)(b) of the Central Excise of the Central Sales Tax Act. Following the ratio of the Tribunal's order in the assessee's own case cited supra, I hold that the credit own case cited supra, I hold that the credit is admissible on cement.
From the above it is very clear that reliance placed by the Commissioner (Appeals) is well founded and Modvat credit is not deniable to the appellant on cement & bitumen.
7. In view of the above Modvat Credit is allowable to the appellant on all items except laboratory equipment. Appeal is allowed to that extent and the department's appeal is rejected.