Judgment:
1. The appellants filed this appeal against the order-in-appeal passed by the Commr. (Appeals), Central Excise, dated 27-2-1997. In the impugned order, the benefit of Modvat credit was denied on pipes and tubes on the ground that they are not covered by the term 'capital goods' 2. Ld. Counsel appearing on behalf of the appellants submits that the appellants are engaged in the manufacture of V.P. Sugar. He further submits that the appellants have filed the necessary declaration in respect of brass pipes and in the declaration, they have mentioned that brass pipes are parts of machinery. He submits that these pipes are parts of machiney i.e. Quad Body used in boiling the cane juice for manufacturing of V.P. sugar. In the Quad Body, the concentration of juice takes place for production of V.P. White Sugar from cane juice.
It is most essential part without which concentration of juice is not possible and hence the question of manufacturing of V.P. White sugar does not arise. He submits that at the relevant time, Rule 57Q provides the benefit of Modvat credit on 'capital goods', their component parts and accessories. He also relied upon the clarification issued by the Central Board of Excise and Customs dated 2nd Dec., 1996 in respect of availment of Modvat creidt on component parts and accessories under Rule 57Q. He therefore, prays that the matter may be remanded to the adjudicating authority for de novo adjudication the basis of the clarification issued by the Board.
3. Ld. JDR appearing on behalf of the respondent submits that the appellants have taken credit on respect of capital goods before filing the necessary document. They had filed a declaration on 7-10-1994. They have not filed any application for condonation of delay before filing the declaration. He submits that the benefit of Modvat credit in respect of brass pipes has rightly been denied as they cannot be said to be capital goods or components, spare parts or accessories and in the declaration, the description of machinery was not given by the appellants. He therefore, prays that the appeal be dismissed.
4. Heard both sides. In this case, the benefit of Modvat credit was denied to the appellants on the ground that they are not covered by the term 'capital goods' nor they are parts of plants and machinery. The Board issued a clarification on availment of Modvat credit on components, spare parts and accessories under Rule 57Q of the Central Excise Rules, 1944. The clarification dated 2-12-1996 is reproduced below : CLARIFICATION ON AVAILMENT OF MODVAT CREDIT ON COMPONENTS, SPARES AND ACCESSORIES UNDER RULE 57Q OF CER Rule 57Q of the Central Excise Rules, 1944 allows credit of duty paid on capital goods used by the manufacturer of specified goods.
Capital goods eligible for credit have been defined in Explanation (I) annexed to Rule 57Q. Clauses (a) to (c) of the said explanation cover specified capital goods falling under Chapters 82,84,85 and 90 and clause (d) covers compontents, spares and accessories of the said capital goods.
2. It has been brought to the notice of the Board that clause (a) of Explanation (I) is being interpreted by some of the filed officers covering only such components, spares and accessories which would fall under Chapter shown under clauses (a) to (c) and credit is allowed only on those components, spares and accessories which are covered under the said Chapters.
3. The matter has been examined. With effect from 23-7-1996, capital goods eligible for credit under Rule 57Q have been specified either by their classification or by their description. Clauses (a) to (c) of Explanation (1) of the said rule cover capital goods by their classification whereas clause (d) covers goods by their description viz, components, spares and accessories of the said capital goods.
It may be noted that there is a separate entry for components, spares and accessories and no reference has been made about their classification. As such, scope of this entry is not restricted only to the components, spares and accessories falling under Chapter 82,84,85 or 90 but covers all components, spares and accessories of the specified goods irrespective in Rule 57Q (i.e. prior to 23-7-1996) when credit was available on components, spares and accessories of the specified captial goods irrespective of their classification.
4. Accordingly, it is clarified that all parts, components, accessories, which are to be used with capital goods of clauses (a) to (c) of Explanation (1) of Rule 57Q and classifiable under any Chapter heading are eligible for availment of Modvat credit.
5. In this case, the clarification issued by the Board was not available to the adjudicating authority as it is issued after the passing of the order-in-original. In these circumstances, the impunged order is set aside the matter is remanded to the jurisdictional Asstt.
Commr., Central Excise, Moradabad for de novo decision taking into consideration the clarification issued by the Board after affording an opportunity of personal hearing to the appelllants. The respondents are at liberty to take legal as well as factual objection at the time of adjudication.