Full Judgment
3. Arguing for the Revenue, Shri Y.R. Kilania, learned JDR submits that this item in question cannot be considered as capital goods. In this context, he relied on para 10 of the decision of the Tribunal in the case of Jawahar Mills Ltd. v. C.C.E., Coimbatore reported in 1999 (32) RLT 379. Para 10 is as under : - Para 16 (iii) of the circular issued along with the Budget 1995 which is relevant in this regard reads as under :- (iii) In the cases of capital goods, the scope of capital goods has been extended by specifying a larger number of machinery which will qualify for credit under Rule 57Q. In respect of such capital goods, it has been provided that so long these are used in the factory of product, credit will be allowed, without the need to establish as to whether such capital goods are used in the manufacture of finished goods. It may be clarified that any equipment etc. purchased by a manufacturer but not used within the factory will not be admissible for Modvat. For instance, R&D equipment used by a manufacturer in their laboratory outside the factory will not be eligible for Modvat. If however, such laboratory is part of the manufacturer's factory, Modvat will be admissible".
4. On the other hand the respondents Counsel relied upon the para 41 of the said order which reads as under : - In the light of the above, the issue as to whether the amendment effected in Notification 11/95, dated 16-3-1995 under Rule 57Q and Notification 14/96-C.E., dated 23-7-1996 is retrospective, becomes academic. We have to decide the matter according to the language of the provision as it stood at the material time. We are required to examine Explanation l(a) as it stood in 1994-95 and 1995-96 and we, therefore, see force in the contention of the assessees that the items which are recognised as eligible to capital goods credit by Notification 14/96 are items covered by Explanation l(a) and it cannot be contended by the Revenue that these items are not covered by the Headings mentioned in Notification 14/96 or that the items are not capital goods within the meaning of Explanation l(a) under Rule 57Q as it stood during the relevant period.
5. In the facts and circumstances, I find that the issue involved herein has been squarely concluded by the aforesaid decision particularly, in para 41 of the said order. Following the same, I accept the contention of the party and accordingly, I do not find any infirmity in the impugned order. In the result, appeal is dismissed.