Judgment:
1. The issue involved in this appeal, filed by M/s. Tata Iron & Steel Co. Ltd., is whether Modvat Credit of the duty paid on the various capital goods is admissible to them.
2.1 I Miss Sonu Bhatnagar, learned Advocate, submitted that the Appellants have a cement plant at Raipur; that mine is situated very close to the cement factory; that the mining is a process integrally connected with the manufacture of cement; that the Commissioner under the impugned Order has disallowed Modvat Credit of the duty amounting to Rs. 9,14,153 and has imposed a penalty of Rs. 25,000 that the Commissioner has disallowed the Modvat Credit in respect of pully 20 kV 415 plus 8507 and Tyre/Tube on the ground that these goods are used in Lime Stone Mines and not used within the factory premises for manufacture of cement; that mining is a integral part of the processing connected with the manufacture of cement and the goods used for mining are capital goods and the Modvat Credit should be allowed. Reliance has been placed on the decision in the case of Jay Pee Rewa Cement v. CCE, 2001 (74) ECC 457 (SO : 2001 (133) ELT 3 (SC).
2.2 Shri H.C. Verrna, learned DR, on the other hand submitted that in Jay Pee Rewa case the Modvat Credit was allowed in respect of inputs under Role 57A of the Central Excise Rules as the said Rule did not in any way specify that the inputs have to be utilized within the factory premises. He, further, mentioned that the Supreme Court in the same case has held that "in view of the provisions of Rule 57Q the Appellant is not entitled to any relief and the appeal was dismissed.
2.3 I have considered the submissions of both the sides, In the case of Jay Pee Rewa the Supreme Court has allowed the Modvat Credit of the duty paid on inputs under Rule 57A as there was no requirement that the inputs were to be utilized within the factory premises nor did rule require the inputs to be brought into the factory premises at any point of time. However, Rule 57Q under which the Modvat Credit of the duty in respect of capital goods is allowed clearly provided that the Credit is allowed on the capital goods used by the manufacturer in his factory.
In view of this the Appellants are not eligible to avail of Modvat Credit of the duty paid on capital goods used in mines.
3.1 The learned Advocate, further, submitted that the Commissioner has disallowed the Capital Goods Credit in respect of Zero Grade Nitrogen used for analysis of raw material in clinker in X-ray Analyser and Gas Analyser, Caliberation Gas Mixture and P-10 gas used as X ray analyser and caliberation gas used in caliberation of analysers on the ground that such goods being chemical cannot be considered as capital goods and do not satisfy the definition of capital goods given in Rule 57Q.She mentioned that the Tribunal in the case of CCE, Raipur v. Birla Jute Industries Ltd., 2001 (135) ELT 280 has allowed capital goods credit in respect of spares for X-ray Analyser, controller and electrical equipment used in the laboratory for testing the quality of the products manufactured; accordingly the capital goods credit is allowed in respect of all these gases which are used for testing the final product.
3.2 The learned DR countered by submitting that the gases do not satisfy the definition of the capital goods as these are neither machine/machinery nor spares or accessories of machine/machinery; that in Birla Jute case the capital goods credit was allowed in respect of spares and not on gases. In reply the learned Advocate relied upon the decision in the case of (Tri.) and CCE, Jaipur v. Siiree Cement Ltd., 2000 (117) ELT 187 (Tri).
Alternatively she mentioned that if capital goods credit under Rule 57Q is not admissible the Appellants are eligible to take Modvat Credit of duty paid on inputs under Rule 57A as all these items are used in or in relation to manufacture of the finished product.
3.3 It is not in dispute that all the items are gases and as such cannot be treated as capital goods they being neither machine/machinery nor spares or accessories of machine/machinery. In the decisions relied upon by the learned Advocate the capital goods credit has been allowed in respect of gas analyser and not the gas. 'However, I find substance in her submissions that the Modvat Credit under Rule 57A may be available to the Appellants. As the Commissioner in the impugned Order has not considered this aspect as to whether these gases are used in or in relation to the manufacture of their finished product, I remand the matter to the Adjudicating Authority with the direction to examine whether these gases are eligible for Modvat Credit under Rule 57A of the Central Excise Rules at the relevant time after hearing the appellants.
4.1 The Commissioner has also disallowed the Modvat Credit in respect of structural items such as angles, tors, bars, channels, hoists, plates and squares on the ground that these are not capital goods under Rule 57Q. The Commissioner has also observed that the concrete foundation for erecting machinery could neither be construed to be components or accessories nor could such a foundation be considered to be used to produce or process the goods. The learned advocate has relied upon the decision in the case of New J.K. Cement Works v. CCE, Jaipur, 1999 (113) ELT 421 (Tri) wherein it has been held that supporting structure of steel is to be considered as part of the plant having regard to the functions it performs of supporting clinkers, hopper through which clinker is fed into the dumpers.
4.2 Learned DR reiterated the findings of the Commissioner who has relied upon the decision of the Tribunal in the case of Indoram Synthetic India Ltd, v. CCE, 1996 (86) ELT 277 and Malika Steels Ltd. v. CCE, 1998 (97) ELT 530 wherein it has been held that the building material used as raw material for construction of plant cannot be said to be used as plant used in the manufacture of goods.
4.3 It has not been denied by the learned Advocate for the Appellants that all these items are used for concrete foundation and as such do not satisfy the definition of the capital goods as interpreted by the Larger Bench of the Tribunal in the case of CCE, Indore v. Surya Roshini Ltd., 2001 (42) RLT 817. These goods are neither used for production of final product nor used in the process of any goods for the manufacture of final product nor used for bringing about any change in any substance for the manufacture of final product. These goods can also not be treated to be components, spare parts or accessories of the machine/machinery, etc. It has also been held by the Supreme Court in the case of CCE v. Jawahar Mills Ltd., 2001 (77) ECC 1 (SC) : 2001 (132) ELT 3 (SC) that use would determine whether an item qualifies or not the requirement of capital goods as defined in Explanation Ha) to Rule 57Q. Accordingly I do not find any reason to interfere with the finding of the Commissioner in respect of non-availability of capital goods credit in respect of these items.
5. The Commissioner has also denied the capital goods credit in respect of paints as the same is used in the factory at any place to save machine and equipment from corrosion and are not used for producing or processing any goods. I agree with the findings of the Commissioner that paint will not qualify to be eligible as capital goods. However, the matter is being remanded to the Adjudicating Authority to examine whether inputs credit under Rule 57 A will be available in respect of paints.
6. The Commissioner has also denied Modvat Credit as the same was taken by the Appellants on the basis of photocopies of the invoice. The learned SDR has also relied upon the decision of the Larger Bench of the Tribunal in the case of CCE, New Delhi v. Avis Electronics P. Ltd., 2000 (69) ECC 272 (LB) : 2000 (117) ELT 571, wherein it has been held that insistence on documents evidencing payment of duty as prescribed by rules is not a technicality and when a particular thing is directed to be performed in any manner prescribed by rules, it should be performed in that manner itself and not otherwise. The Credit has also been denied as the invoices were not printed with the words "Duplicate for Transporter". On query from the Bench the learned Advocate could not answer as to why the Credit was taken on the strength of photocopies. The Modvat Credit can be taken only on the basis of duty paying documents as specified in Rule. As photocopy is not a specified duty paying document the credit is disallowed. However, it has been mentioned that the invoices instead being printed bore rubber stamp showing on them as "Duplicate for Transporter." As the invoices were duly stamped as duplicate Modvat Credit_cannot be denied on the strength of such invoices.
7. The Commissioner has also disallowed Modvat Credit in respect of invoice No. 487 as the invoice was not consigned in their name but on their account. The Commissioner has mentioned in his findings that the Appellants had not contested this charge in their reply as well as during the course of personal hearing. In the appeal memorandum it has been mentioned that the Credit cannot be disallowed as the name of the Appellants was mentioned in the invoice. As there is no finding of the Commissioner on this aspect I remand the matter for re-adjudication.
8. As the Modvat Credit has been availed of wrongly penalty is imposable on them. However, the same is reduced to Rs. 10,000. The appeal is disposed of in the above terms.