Judgment:
1. In Appeal Nos. E/1854 & 1856/97 by the revenue, the issue being common pertaining to the same issue, hence they are taken up together for disposal as per law.
2. The Appeal No. E/1775/97 filed by the revenue arises from Order-in-Appeal No. 121/97, dated 10-4-1997 which also pertains to transformer oil used in the transformer and the Commissioner (Appeals) after noting the judgment of Tribunal has allowed the appeal, against which the revenue has filed this present appeal and hence, this appeal is also taken up together along with the above two appeals of revenue for decision. The respondents have not appeared in this case, despite notice.
3. The revenue is aggrieved with the impugned Orders-in-Appeal of Commissioner (Appeals) granting Modvat credit on transformer oil in terms of the various judgments of Tribunal noted by him in his order.
The Commissioner has noted that in terms of the judgment of Tribunal in the case of C.C.E. v. Nav Bharat Paper Mills as reported in 1996 (86) E.L.T. 501 the transformers have been treated as capital goods under Rule 57Q for grant of the credit. He has noted that transformer oil is essential for running the transformer or used in the transformer is therefore, admissible to Modvat credit and cannot be treated to be excluded. In this regard, he relied on the judgment of Tribunal in the case of Pragati Paper Mills v. C.C.E. as reported in [1996 (88) E.L.T.137 (T)] wherein it has been held that the transformer oil has been treated to be used in relation to the manufacture of final product. The revenue contended that in Order-in-Original, the appellants had stated that the transformer oil was used for effective functioning of the machinery as otherwise the functioning of the machinery would be imported and consequently the production also come to a halt, hence these facts are different than the facts noted by the Commissioner, therefore, the ratio of the said judgments would not apply in this case.
4. At this stage, the learned SDR points out that in the case of NCEF Ltd. v. C.C.E. as reported in 1995 (77) E.L.T. 238, wherein the Tribunal has held that transformer oil is not entitled for the benefit of Modvat credit as it is used as coolant and as it is filled at the clearance of transformer from the factory but is merely sent along with the transformer. He submits that the findings given in the judgment would have bearing on the present case and in terms of this judgment, the judgment noted by the Commissioner (Appeals) is distinguishable.
5. On the other hand, the learned Consultant submits that the judgment of NGEF Ltd. is clearly not applicable on the ground that as the Tribunal dealt with coolant added thereof for which it held that it cannot be considered as a component for the purpose of transformer. He submits that it is not used as coolant in the present case or as component but to make the transformer functional. The learned Consultant also submits that in their own case vide Final Order No.1305 & 1306/99, dated 4-6-1999, the Tribunal has already held that lubricant/grease are entitled for the benefit of Modvat credit and in terms of the judgments noted therein including Larger Bench judgment in the case of Jawahar Mills Ltd. v. C.C.E. as reported in 1999 (108) E.L.T. 47 and in that view of the matter, the issue is settled hence the revenue appeals are required to be dismissed. He also refers to Final Order No. 1016/98, dated 27-5-1998 of the SRB comprising of the then President and Shri K. Sankararaman, Member (T) in the case of Canara Wood, wherein they have applied the judgment of Tribunal rendered in the case of Pragati Paper Mills as reported in 1996 (88) E.L.T. 137 and has held that lubricating oil are entitled for the benefit of Modvat credit.
6. The learned DR Shri S. Kannan submits that when the transformer oil is supplied along with the transformer at the first instance, before installation, they are entitled for the benefit but when they are subsequently replaced they are in the nature of consumables and consumables are excluded from the benefit of Modvat credit.
7. On a careful consideration of the submissions, I notice that the judgment rendered in the case of NGEF Ltd. is over-ruled by Larger Bench judgment of Tribunal rendered in the case of Jawahar Mills Ltd. even the findings given by the Larger Bench in the case of Shri Ramakrishna Steel Industries Ltd. v. C.C.E. as reported in 1996 (82) E.L.T. 575 and that of Union Carbide India Ltd. v. C.C.E. as reported in 1996 (86) E.L.T. 613 by the Tribunal and the concept of inputs used for the manufacture including as to what goods are to be treated as capital goods have been dealt in these cases. The ratio applies to the present case. The Tribunal in the present type of cases has been dismissing revenue appeals pertaining to this item including the item of lubricating oil which has been treated as capital goods in the judgments noted supra. Therefore, the issue is conclusive in nature and it is not possible to again refer the matter to the Larger Bench as three Larger Bench have considered and all dealt with the issues in one way or the other. Hence, I am of the considered opinion that the judgment of NGEF Ltd. cited supra is over-ruled by subsequent Larger Bench judgment of the Tribunal, therefore, the Tribunal's following subsequent judgment vide final order No. 1305 & 1306/99, dated 4-6-1999 is required again to be applied in batch of these cases.
8. By such application, I find there is no merit in the appeals of the revenue and hence all the three appeals are rejected.