Judgment:
1. The short point for determination in this appeal is whether Modvat credit will be admissible on Metal Rolls and Lubricated Oil.
2. The facts of the case are that the appellants are engaged in the manufacture of flat rolled products of non-alloy steel falling under Chapter sub-headings 7214.90 & 7211.19 of the schedule to the Central Excise Tariff Act. During the checking of the RT-12 for the month of October, 1994, the Central Excise Officers found that the appellant had taken Modvat credit amounting to Rs. 45,248.00 on the strength of invoices issued by various parties. The Department alleged that these invoices have not been issued in the prescribed form under Notification No. 15/94-C.E. (N.T.), dated 30-3-1994 and Notification No. 33/94-C.E.(N.T.), dated 4-7-1994 inasmuch as they did not contain complete information as per Sl. No. 4 of the said Form annexed to the Notification and, therefore, issued a show cause notice to the Appellants asking them to explain as to why the Modvat credit should not be disallowed to them on these goods and why duty should not be demanded from them and why penalty should not be imposed.
3. The appellants, in reply to the show cause notice, submitted that the allegations about the invoices were not sustainable and explained that the invoices indicated the duty and the invoices were issued by the dealers. After careful consideration of the submissions made, the Asstt. Collector rejected the request of the Assessee. In appeal, the ld. Commissioner (Appeals) held that Metal Rolls and Lubricated Oil were not eligible to Modvat credit and confirmed the order of the Asstt. Collector on these two items.
4. Shri Rajesh Chibber, the ld. Advocate appearing for the Appellants, submits that they had claimed Modvat credit on metal rolls as capital goods. He submitted that metal rolls are integral part of the rolling mill. He submits that parts of machinery and plant are specifically covered under Rule 57Q. He submits that since parts of machinery are covered, therefore, they have rightly taken Modvat credit on metal rolls as capital goods.
5. In regard to Lubricating oil, the ld. Counsel submits that right from the beginning they have been claiming Modvat credit on lubricating oil as an input. He submits that Modvat credit on lubricating oil has been allowed by the Tribunal in the case of Pragati Paper Mills (Pvt.) Limited v. CCE, Meerut 1996 (88) E.L.T. 137. He submits that this decision of the Tribunal has been followed subsequently in other cases as well. The ld. Counsel, therefore, submits that Modvat credit is admissible on both metal rolls as well as Lubricating oils.
6. Shri Y.R. Kilaniya, the ld. JDR appears for the Respondent Commissioner and adopts the findings of the lower authorities.
7. Heard submissions of both sides. On careful consideration of the submissions made, I find that the short point for determination is whether Modvat credit is admissible on metal rolls and lubricating oils.
8. I find that parts of machine, machinery, plant etc. are specifically specified under Rule 57Q of the Central Excise Rules, 1944 with effect from 1-4-1994. I note that the present case pertains to October, 1994.I also note that the Assessee has been claiming Modvat credit on metal rolls as capital goods. Having regard to the fact that metal rolls are an integral part of the rolling mill and since parts of machine, machinery and plant are covered by Rule 57Q specifically, therefore, Modvat credit shall be admissible on metal rolls as capital goods.
9. Insofar as the admissibility of lubricated oil for Modvat credit is concerned, I find that similar issue came up before the Tribunal in the case of Pragati Paper Mills (Pvt.) Ltd. (supra). The Tribunal in this case, in Para 5 held as under: "5. Coming to the next item, lubricating oil, it has been held by the Collector (Appeals) in his impugned order that this material is used neither as a fuel or for generation of electricity. No doubt the extended coverage of the inputs in Rule 57A with effect from 1-3-1994 specifically provided for inputs used in the aforesaid manner. But it must be remembered that these items are mentioned in the inclusive definition of inputs and hence the actual criterion to decide whether these are inputs, would be to look into the relevant provision itself which goes by the onvenient term of abbreviation 'input'. This term refers in the context of Rule 57A to goods used in or in relation to the manufacture of the final product. If it is established that the material or goods in question find use in the manufacture or in relation to the manufacture of the final product, the benefit cannot be denied on the only ground that such use is not as fuel or for generation of electricity. There are only certain specific uses qualifying for Modvat benefit but such uses are illustrative and not exhaustive. In this connection, the ld. Consultant referred to the discussions on the scope of the term 'in relation to the manufacture' in the larger Bench decision reported in 1996 (82) E.L.T. 575. As stated therein, the said expression is one of considerably larger import than the term 'in the manufacture'. Again even the scope of the expression 'in the manufacture' itself has been comprehensively dealt with by the Supreme Court in J.K. Cotton Spg. & Weaving Mills Co. Ltd. v. STO - AIR 1965 SC 1310. It was laid down in the said case that where any particular process is so integrally connected with the ultimate production of goods that but for that process manufacture or processing of goods would be commercially inexpedient goods required in that process. would fall within the expression in the manufacture of goods': Applying this test it would be seen that Mobil Oil is used in relation to the manufacture of the final product. The fact that it is applied or used in the machine and machinery and not directly on the raw materials etc. would not affect the position. A specific provision for covering material used as fuel or those used for generating electricity has been given to remove an ambiguity as a doubt might have been felt that use of fuel or for generation of electricity are processes anterior to the actual production of the final product. The fact that there is no such express provision in respect of lubricating oil cannot deprive them of the benefit of Rule 57A if they satisfy the criterion of use in or in relation to the manufacture even if it is not directly in the manufacturing process as raw material. Without the use of such lubricating oil in the course of manufacture of paper such manufacture would become commercially inexpedient which is one of the tests laid down in the case of J.K. Cotton Spg. & Wvg. Mills referred to above." Following the ratio of the above judgment of this Tribunal, I hold that Modvat credit will be admissible on lubricating oils used by the appellants.
10. In the result, the impugned order is modified to the extent stated above and the appeal is disposed of accordingly.