Full Judgment
2. The appellant was engaged in the manufactured of sugar molasses and was availing modvat credit. According to the Revenue, it had wrongly availed cenvat credit on jointing gasket sheets, asbestos graphite lub packing, steel packing, welding electrodes and plain plates during the period from March 2003 to January 2004. According to the assessee, packing/jointing was used to tighten the joints of the air of the gas in the sugar mill plant for various lines of pipes, besides for jointing purposes in boilers, sulphur furnace etc. For electrodes, it was contended that they were used for repairing various machineries, which was needed due to wear and tear. The electrodes were also used for "hard facing" of various parts of machineries. The adjudicating authority held that, the items in question were not eligible capital goods. It was also held that the welding electrodes were only meant for maintenance and were not eligible for cenvat credit. The Appellate Commissioner (Appeals) has discussed each item in great detail and held that all the three items were not eligible for cenvat credit.
3. As regards the cenvat credit taken in respect of welding electrodes, the matter is fully covered by the ratio of the decision of the Larger in J.K. Cement Works v. CCE, Jaipur reported in 2007 (78) RLT (CESTAT-Del.) and v. CCE reported in 2007 (79) RLT 810. Therefore, cenvat credit has been rightly denied by the authorities below in respect of welding electrodes.
4. As regards the plain plates, it is clear that plain plates by themselves are not capital goods, as defined in Rule 2(b) of the Cenvat Credit Rules, 2002. It has been held by the authorities below that, the appellant did not produce any corroborative material/evidence regarding the specific use of plain plates. These were, therefore, considered to have been used in general repair and maintenance/fabrication work in the factory. It was held in DSM Sugar Ltd. v. CCE, Kanpur reported in 2000 (135) ELT 654 (Tri.-Del.) that, plates, channels, section, sheets etc. are common civil construction items and in the normal course would not be eligible for modvat credit. Similar view was also taken in Rosa Sugar Works v. CCE, Kanpur 5. The learned authorized representative for the assessee tried to argue that the expression "plain plates" should be treated to be referring to the parts of the machinery used in the factory of the assessee for manufacturing sugar. He submitted that large quantity of plates are used in the moving cranes which are employed during the manufacturing process. Admittedly, however, no such specific use was pointed out from any material on record. The word "plate" in general would mean, in the context, sheet or metal etc. which has even surface and uniform thickness often as a part of mechanism. The words "plain plate" do not indicate by themselves any article, which can be described as a part of the machinery. The word "plate" is of generic nature and plates can be used in construction of ships, railway rolling stock, tanks, boilers, bridges and other structural work where great strength is required. When so used they will be inputs of such constructed articles [See, HSN Explanatory Notes 73.13 Section XV]. It transpires from the record that the appellant did not indicate that plain plates were in fact used in respect of any particular machinery as a part, accessory or component thereof. Therefore, the authorities below have rightly disallowed cenvat credit in respect of plain plates.
6. Cenvat credit has been denied by the authorities below even in respect of jointing gasket sheets, asbestos, graphite lub pkg. and steam pkg. by holding that they were not included under the definition of "capital goods". However, these items have been held to be eligible for modvat credit by a Division Bench of this Tribunal in CCE, Patna v.Bihar Caustic and Chemicals Ltd. reported in 2000 (118) ELT 196 : 1999 (35) RLT 264 which was followed in CCE Meerut-II v. Kissan Sahakari Chinni Mills reported in 2007 (78) ELT 820. It has been held by these decisions that the gasket fibre jointing sheets which were items to seal the leakage and allowing flow of liquids during the process of manufacture from one equipment to another, were components and/or accessories of plant and machinery installed at the factory and they qualified for modvat credit as capital goods. As held in Dwarikiesh Sugar Industries v. CCE, Meerut decided on 16.8.2007 that the asbestos gaskets are used in boilers, sulphur furnace, quads, pans and pumps, they can be considered as parts of the machinery. Even after the omission of the word "plant" in the definition of capital goods in the subsequent rules, the cenvat credit would be admissible in respect of such asbestos, gaskets without which the machinery cannot function.
Therefore, cenvat credit has been wrongly denied in respect of jointing gasket sheets, asbestos graphite lub pkg. and steel pkg. Both the sides have stated cenvat credit in respect of jointing gasket sheets, asbestos etc. was to the tune of Rs. 20,592/-. Therefore, the said cenvat credit amount in respect of jointing gasket sheets, asbestos etc. was rightly taken and cannot be recovered from the assessee. The impugned order to the extent that it disallows the cenvat credit of Rs. 20,592/- in respect of jointing gasket sheets, asbestos etc. is, therefore, set aside. As regards welding electrodes, since there was conflict of views at the relevant time, penalty of Rs. 30,624/-which corresponds to the cenvat credit wrongly taken, cannot be sustained following the view of the Tribunal taken in Excise Appeal No. 2830-2831 of 2005 decided on 3.5.2007 and in paragraph 5 of the decision in Excise Appeal No. 3116 and 3121 of 2005 decided on 2.8.07. The appeal is, accordingly, partly allowed.