Dlf Cement Vs. Commissioner of Central Excise

1. This is an appeal filed against the decision of the Commissioner of Customs & Central Excise (Appeals), New Delhi made in Or-der-in-Appeal No. 411-C.E./JPR/97, dated 30-12-1997. The appellants are engaged in the manufacture of cement falling under Chapter 25 of the schedule under Tariff Heading under Chapter 25. After the Modvat credit was introduced, the appellant filed declaration in terms of Rule 57T of the Central Excise Rules and claimed such credit of the duty paid on capital goods used for production or process of the final product. A show cause notice dated 27-9-1996 was issued denying Modvat credit on goods in respect of structures and parts of fire extinguishers and parts of programmable logic control (page 15). On 22-10-1996 a reply to show cause notice was given by the assessee/appellant. By Order-in-Original No. 131/91, the Asstt. Commissioner rejected the Modvat credit amounting to Rs. 1,68,133/- consisting of Rs. 1,33,951/- relating to structure and parts, Rs. 26,982/- on parts of programmable logic controller and Rs. 7,200/- on fire extinguishers as not entitled to the Modvat credit, against which an appeal was filed and the appellate authority i.e. the Collector of Central Excise (Appeals), New Delhi by the impugned order confirmed the Order-in-Original following the judgment of the CEGAT in J.K. Pharmachem Ltd. v. C.C.E., Trichi [1998 (102) E.L.T. 488]. In the confirming order the appellate authority had held that regarding parts of electrical control, AC, did not say in his order how the equipment was used and whether functioning of the same was integrated with the lying in the product line and the equipment was used in the production line. He also held in the case it was found by the AC that equipment was integrated the appellant would be entitled to the credit so far as the programmable logic controller and he remanded the matter as far as the other two items viz. fire extinguishers and the structure he held against the appellant. Hence the present appeal.

2. Both Shri Vyas for the assessee and Shri Arunachalam ld. DR for the department argued with marked ability.

3. Shri Vyas in a lucid manner argued that the goods in question are cable trays and they were accessories used in the cement plant. As far as wires and cables are concerned he argued that the matter has been settled recently by the Larger Bench decision of the Tribunal in the case of Jawahar Mills Ltd. v. Commissioner of Central Excise, Coimbatore reported in 1999 (108) E.L.T. 47 para 39 thereof. As far as the fire extinguishers are concerned he also stated that the observations in the said case will hold good.

4. Shri Arunachalam, vehemently argues that the assessee has treated it as "structure". In fact he invited my attention to the reply to the Show Cause Notice dated 22-10-1996 (page 16 of the paper book) the assessee has treated the cable tray as a structure and he states therefore, that the issue is covered by the judgment of the Tribunal in Malvika Steel Ltd. v. C.C.E., Allahabad - 1998 (97) E.L.T. 530. He has especially cited in the Tribunal's judgment in paras 5 & 6 thereof.

5. I have considered very interesting arguments made by both parties.

If we look into the case the point to be noted is reflected in the reply to the show cause notice. In the reply at page 18 of the paper book the assessee says as follows "structures and parts of structures declared under sub-heading 73.80 are cable trays which has been used for lying the cable trays in the plants. These cable trays are accessories." When we look into the aspect of the matter we have to see now the assessee has approached the problem. The assessee has stated that the goods in question were structures. It is true that the larger Bench decision of the Tribunal in Jawahar Mills Ltd. case (supra) had examined a scope of Modvat credit in respect of capital goods. In para 39 thereof, through they have considered the various cases including the case of J.K. Pharmachem Ltd. v. C.C.E., Trichi reported in 1998 (102) E.L.T. 488 (para 39 of the judgment). In para 39 the larger bench held that wires and cables would be covered by the expression plant. In para 40 of the same were also held capital goods under Rule 57Q.6. However, should I have follow the larger Bench decision or should I have to follow the judgment of the two Member Bench in Malvika Steel Ltd. -1998 (97) E.L.T. 530 in this case. If I see the reply to the show cause notice it says that the cable trays are "structure". It is specifically stated that the cable trays have been treated as structures used in the plant. Such type of steel structure a have been treated as not entitled to Modvat credit under Rule 57Q in the case of Malvika Steel Ltd. Supra. It is. true that the larger Bench decision in Jawahar Mills Ltd. and the Malvika Steel Ltd. both deal with liability of the Modvat credit under Rule 57Q. But in the Larger Bench decision the Tribunal decided the case in favour of the assessees in respect of wires & cables. The larger bench decision has been delivered and referred by the Tribunal in later point of time but yet the said Judgement does not refer to the Malvika Steel Ltd. probably because the question involved in that Jawaltar Mills case is entirely different from the question decided in Malvika Steel Ltd. For the sake of repetition I find that the Malvika Steel Ltd. case decided cement and structure. Here the assessee themselves have treated the cable trays as structures, in his reply to the show cause notice. I, therefore, follow the Judgement of the 2 Member Bench in the case of Malvika Steel Ltd. -1998 (97) E.L.T. 530.1, therefore, hold in the Larger Bench decision in Jawahar Mills was not a case relating accessories it was a case of plant as is revealed in paras 39 & 40 of the judgment. Shri Vyas also states that the cable trays are accessory has been mentioned in reply.

But I am afraid, I do not agree with that argument. It is true that assessee has claimed the cable trays as the accessory that is only in the second sentence of the letter, but claimed it is a structure in the first sentence which is most important. I am interpreting written instruments when earlier sentence is contradicted by a subsequent sentence what is contained in the earlier sentence will prevail. In the circumstances of the case, I decide the case against the assessee and dismiss the appeal.