Judgment:
1. In the impugned order Ld. Commissioner (Appeals) had given the benefit of Modvat credit on Pollution Control Equipment by relying on the judgment of the Hon'ble Supreme Court in the case of IFFCO vs CCE, Ahmedabad and 2. Being aggrieved by this order, Revenue has filed this appeal on the ground that as per defination of capital goods under Rule 57Q(1) of the Central Excise Rules, 44, the credit was admissible on the capital goods which were used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final product or on the capital goods mentioned in the explanation 1(d) of Rule 57Q(1) of the Central Excise Rules, 44 during the relevant time.
3. Arguing the case for Revenue Shri S.C.Pushkarna, Ld. DR submits that Pollution Control Equipment and Cooling Equipment were neither used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final product nor were covered under the explanation 1(d) of Rule 57Q(1) of the Central Excise Rules.
ld. DR submits that capital goods scheme under went a change and the defination of capital goods was substantially modified and changed by issue of Notification No.14/96-CE/NT dt.23.7.96. He submits that in the new scheme goods specified under the Notification were entitled to Modvat on capital goods irrespective of the fact whether or not these were used in processing or producing of any goods or for bringing about any change. Ld. DR, therefore, submits that the impugned order does not take the correct view of the position as was available during the material time and prays that the impugned order may be set aside in so far as treatment of Pollution Control Equipment as capital goods is concerned and that the appeal may be allowed.
5. I have heard the Ld. DR. I have also perused the impugned order and the written submissions given by the respondent herein. I have also perused the case law relied upon by the Ld. Commissioner (Appeals) in the impugned order. I note that the Hon'ble Supreme Court in the case of IFFCO vs CCE, Ahmedabad reported in 1996(86)ELT.177 in para 9 of this judgment held as under: "9. That leaves us to consider whether the raw naphtha used to produce the ammonia which is used in the effluent treatment plant is eligible for the said exemption. It is too late in the day to take the view that the treatment of effluents from a plant is not an essential and integral part of the process of manufacture in the plant. The emphasis that has rightly been laid in recent years upon the environment and pollution control requires that all plants which emiteffluents should be so equipped as to rid to effluents of dangerous properties. The apparatus used for such treatment of effluents in a plant manufacturing a particular end product is part and parcel of the manufacturing process of that end-product. The ammonia used in the treatment of effluents from the urea plant of the appellants had, therefore, to be held to be used in the manufacture of urea and the raw naphtha used in the manufacture of such ammonia to be entitled to the said exemption".
I also note that this judgment was followed subsequently by the Tribunal in the case of Century Cements Ltd. vs CCE reported in 1997(95)ELT.655 and in a number of cases decided thereafter. I also note that Larger Bench of this Tribunal in the case of Jawahar Mills Ltd. reported in 1999(108)ELT.47 which was further examined by still Larger Bench in the case of Surya Roshni reported in 2001(42)RLT.817 held that each case is to be examined and then a decision has to be taken. In the instant case I find that the Hon'ble Supreme Court has already rendered a finding that Pollution Control Equipment is an integral part of the process of manufacture of the products, I therefore, hold that it is eligible to Modvat credit. Having regard to this finding and following the ratio of the judgment of the Supreme Court I hold that Modvat credit will be admissible on Pollution Control Equipment. In the circumstances, the impugned order is upheld and the appeal of the Revenue is rejected.