Collector of Central Excise Vs. Banmore Electricals P. Ltd.

Collector of Central Excise vs Banmore Electricals P. Ltd.

Type Court Judgment Court Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi Decided Nov 18, 1997

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Citation: sooperkanoon.com/12141
Court: Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On: Nov 18, 1997
Subject: Service Tax

Case Summary

AI-generated summary - not the official court judgment text.

Service Tax

Key legal issue: Service Tax

Parties & Advocates

Appellant / Petitioner

Collector of Central Excise

Respondent

Banmore Electricals P. Ltd.

Legal References

Reported In: (1998)(97)ELT367TriDel

Excerpt

.....point for determination in the present appeal is whether modvat credit will be admissible on locks and padlocks provided with the transformers under rule 57a.2. shri d.k. nayyar, ld. jdr submits that the respondents herein are engaged in the manufacture of transformers and were availing credit of duty paid on inputs under the modvat scheme. they claimed the credit of duty on padlocks and locks. the department alleged that locks and padlocks are not used in or in relation to the manufacture of transformers and since the manufacture of transformers is complete even without the locks and padlocks, therefore, padlocks and locks were not essential part and are not used in or in relation to the manufacture of transformers and therefore no modvat credit under rule 57a was admissible to the respondents herein. the ld. jdr submitted that locks and padlocks are bought out items and are fitted only as an abundant caution against pilferage of oil used as lubricant in the transformers.he submits that at best these items can be called accessories but cannot be treated as inputs under rule 57a so as to be eligible for benefit of modvat credit. he refers to the decision of this tribunal in the case of collector of central excise v. standard alkali, reported in 1992 (59) e.l.t. 127 (tribunal) in which this tribunal had held that the first condition for inputs is; it must be used in or in relation to the manufacture of the final product. he submits that once this test is passed then the second test will be whether it is a specified item in the notification issued for this purpose and then the important test will be that it is not an excluded category as provided in the explanation of rule 57a. the ld. jdr submitted that in view of the above submissions the asstt. collector has rightly denied them the benefit of modvat credit.3. none appeared for the respondents. however there is a request for consideration of this case on merits.4. we have heard the submissions of the ld. jdr.....

Full Judgment

1. The short point for determination in the present appeal is whether Modvat credit will be admissible on locks and padlocks provided with the transformers under Rule 57A.2. Shri D.K. Nayyar, ld. JDR submits that the respondents herein are engaged in the manufacture of transformers and were availing credit of duty paid on inputs under the Modvat scheme. They claimed the credit of duty on padlocks and locks. The Department alleged that locks and padlocks are not used in or in relation to the manufacture of transformers and since the manufacture of transformers is complete even without the locks and padlocks, therefore, padlocks and locks were not essential part and are not used in or in relation to the manufacture of transformers and therefore no Modvat credit under Rule 57A was admissible to the respondents herein. The ld. JDR submitted that locks and padlocks are bought out items and are fitted only as an abundant caution against pilferage of oil used as lubricant in the transformers.

He submits that at best these items can be called accessories but cannot be treated as inputs under Rule 57A so as to be eligible for benefit of Modvat credit. He refers to the decision of this Tribunal in the case of Collector of Central Excise v. Standard Alkali, reported in 1992 (59) E.L.T. 127 (Tribunal) in which this Tribunal had held that the first condition for inputs is; it must be used in or in relation to the manufacture of the final product. He submits that once this test is passed then the second test will be whether it is a specified item in the Notification issued for this purpose and then the important test will be that it is not an excluded category as provided in the explanation of Rule 57A. The ld. JDR submitted that in view of the above submissions the Asstt. Collector has rightly denied them the benefit of Modvat credit.

3. None appeared for the respondents. However there is a request for consideration of this case on merits.

4. We have heard the submissions of the ld. JDR and perused the evidence on record. We find that locks and padlocks are being supplied in the normal course along with the transformers. However, the transformers appear, to have been designed in such a fashion that the provision of padlock and locks is necessary for the safety of the lubricant oils in the transformers. Once the transformers are designed in such a way as to use padlocks and locks then it become an integral part of the transformers and can be termed as an input if it is so commercially supplied in all cases. However, one condition shall have to be specified before allowing the claim that the costs of padlocks and locks is included in the value of the transformers for purposes of levy of duty under the Central Excise Act, 1944. Therefore, the impugned order is being upheld. However, this decision will be subject to satisfaction of the Assistant Commissioner concerned to satisfy himself that the value of the padlocks and locks is included in the value of the transformers for purposes of levy of Central Excise duty.

In the result the appeal is rejected.

Same Court & Year Customs Excise and Service Tax Appellate Tribunal CESTAT Delh... Same Parties Collector of Central Excise vs Banmore Electricals P. Ltd. Same Subject Service Tax