Full Judgment
2. The appellants herein are engaged in the manufacture of C.R. coils etc. Modvat credit has been disallowed on several items claimed to be capital goods. The ground for disallowing capital goods credit is that the items do not fall within the coverage of the explanation to Rule 57Q as capital goods.
3. I have heard both sides. My findings on the various items are recorded as under :- (i) Current Transformer ratio : Credit of Rs. 10,450 has been denied on this item which is used for supplying required current to the Rolling Mill Machinery. Since the capacity was not the permitted capacity, I hold that the credit is not available on this item.
(ii) Float cum charger : Credit of Rs. 7860 has been denied on this item which is used to charge D.C. Battery to supply D.C. power to D.C. Motors of Rolling Mill. This is eligible capital goods being part of Rolling Mill Machinery, applying the ratio of the decision of the Tribunal in the case of Nova Udyog Ltd, [1996 (88) E.L.T. 532] and Century Cements [1997 (95) E.L.T. 655].
(iii) R.C. Snubber, Capacitor : These are items which are parts of ABB Master System of Rolling Mills and used to carry electrical signals for timing/start up to the Rolling Mill Equipments and the capacitor is used to trip the system/equipment in case of overload power supply. Since these items are parts of Rolling Mill machinery, applying the ratio of the Tribunal decision in the case of Century Cements cited supra and the decision in the case of Vivek Alloys Ltd. [1998 (98) E.L.T. 156 (T)], I hold that the credit of Rs. 6840 on these" two items is available.
(iv) Parts of PLC : These items used to monitor and control the annealing operation of the goods are capital goods as they are component parts of Programmed Logical controller, applying the ratio of the Tribunal's decision in the case of J.K. Synthetics Ltd. [1996 (88) E.L.T. 785] and Jindal Polymers [1998 (103) E.L.T. 569 (T) = 1998 (25) RLT 838]. Therefore, I hold that credit of Rs. 25,334/- on this item is admissible.
(v) Sub-assembly of ABB Master System : Credit of Rs. 8542 has been disallowed on this item which is used for implementing specific functions such as start up/shut off, sequencing, timing to control various Cold Rolling machinery. Therefore, sub-assembly is capital goods eligible to credit as it is a part of ABB Master System in the light of the Tribunal's decision in the case of J.K. Synthetics Ltd. and Jindal Polymer cited supra.
(vi) Frequency Meter : Credit of Rs. 8004 has been denied on this item which is used to check the flow of HCL in pickling process of HR Coil. Since this item is process control equipment it is eligible to capital goods credit.
(vii) Circuit Breaker: Credit of Rs. 75,770.00 has been disallowed on this item which is used to provide the required volt of power to the machinery for operation of the same. In the light of the Tribunal's decision in the case of Modi Rubber Ltd. [1999 (114) E.L.T. 724] these are eligible to capital goods credit being used for disconnecting the circuit of machinery according to operational sequence to produce the final product.
4. In the result capital goods credit is held to be admissible to all items except Current Transformer ratio. Penalty of Rs. 6,000/- is set aside.