Bhushan Steel and Strips Ltd. Vs. Commissioner of Central Excise - Court Judgment

Excerpt:

.....propane fuel. the motor vehicle on which the steel tanks were mounted, are themselves classified under sub-heading 8704.20 and are received in their factory under the invoice issued by m/s. s.v. tank & vessel ltd., turbhe, navi mumbai. the asstt.commissioner of central excise division-ii, ghaziabad vide his order dated 5-6-2000 has observed that these tanks fall under sub-heading 7311.00 which does not find place in the definition of the capital goods under rule 57q. therefore, the modvat credit on the same is not admissible and has confirmed the demand of aforesaid amount on them.the party filed an appeal but the same is rejected by commissioner (appeals), ghaziabad vide his order dated 27-2-2002.2. this is a stay petition against the impugned order of commissioner (appeals). i have heard shri rajesh chibber, advocate for the appellants and shri s.c. pushkarna, jdr for the respondents. the ld.counsel for the appellants is not disputing that steel tanks fall under sub-heading 7311.00 which does not find mention under the definition of capital goods; under rule 57q. it is however contended that the steel tanks are mounted on the motor vehicles for transport of propane gas;.....

Judgment:

1. The appellants manufacture CR Coils/sheets, GP coils/ sheets, GC sheets & Oxygen gas falling under Chapters 72 and 28. They availed Modvat credit of Rs. 2,16,000/- on fabricated steel tanks falling under sub-heading 7311.00 as capital goods under Rule 57Q of Central Excise Rules, 1944. These fabricated steel tanks were mounted on vehicles which were used for carrying propane fuel. The motor vehicle on which the steel tanks were mounted, are themselves classified under sub-heading 8704.20 and are received in their factory under the invoice issued by M/s. S.V. Tank & Vessel Ltd., Turbhe, Navi Mumbai. The Asstt.

Commissioner of Central Excise Division-II, Ghaziabad vide his Order dated 5-6-2000 has observed that these tanks fall under sub-heading 7311.00 which does not find place in the definition of the capital goods under Rule 57Q. Therefore, the Modvat credit on the same is not admissible and has confirmed the demand of aforesaid amount on them.

The party filed an appeal but the same is rejected by Commissioner (Appeals), Ghaziabad vide his order dated 27-2-2002.

2. This is a Stay Petition against the impugned order of Commissioner (Appeals). I have heard Shri Rajesh Chibber, Advocate for the appellants and Shri S.C. Pushkarna, JDR for the respondents. The ld.Counsel for the appellants is not disputing that steel tanks fall under sub-heading 7311.00 which does not find mention under the definition of capital goods; under Rule 57Q. It is however contended that the steel tanks are mounted on the motor vehicles for transport of propane gas; that the motor vehicles themselves should be considered as integral part/component of their galvanising line falling under Chapter Heading No. 8479.19 or metal rolling mill falling under sub-heading No. 8455.10 on which the Modvat credit is admissible under Rule 57Q; that being a part of such factory machinery, the Modvat credit on motor vehicle and the tank should be allowed. Prima fade, I do not find much force in this argument. Admittedly the tanks and the motor vehicle are received in the factory of the appellants under the invoice classifying the item under Heading No. 8704.20. The motor vehicle used for transporting the propane fuel as such cannot be considered as an integral part/component of the factory machinery. However, this aspect will be gone into only at the time of final hearing of the appeal. Therefore, the appellants have not made out a prima facie case in their favour. I therefore direct them to deposit the entire amount of Rs. 2,16,000/- on or before 20-8-2002. The matter will be called for reporting compliance on 22-8-2002.