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Upper India Steel Mfg. and Engg. Vs. Commr. of C. E. - Court Judgment

SooperKanoon Citation

Court

Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi

Decided On

Reported in

(1996)(87)ELT97TriDel

Appellant

Upper India Steel Mfg. and Engg.

Respondent

Commr. of C. E.

Excerpt:


.....central excises & salt act, 1944*.they are availing of modvat credit of duty under section 57a of central excise rules on inputs used in the manufacture of their final products.these inputs include thermo couple tips, mini tips, and clay graphite stopper. the jurisdictional assistant commissioner held that these are not eligible inputs for modvat credit as they are covered by the exclusion clause under rule 57a according to which for the purpose of rule 57a "input" does not include machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods in or in relation to the manufacture of final product. the assistant commissioner held that these are parts of the machinery, namely, furnace and hence ineligible for modvat credit. these orders of the assistant commissioner were challenged before commissioner (appeals), who passed the present combined order dated 28-5-1992. the commissioner (appeals) held that graphite electrodes are eligible for modvat credit. as regards clay graphite stopper, its function is only that of a stopper. the commissioner (appeals) held that this item as part of a machine is covered by the exclusion clause in the.....

Judgment:


1. Appellants are engaged in manufacture of iron and steel products falling under Chapters 72 and 73 of Central Excises & Salt Act, 1944*.

They are availing of Modvat credit of duty under Section 57A of Central Excise Rules on inputs used in the manufacture of their final products.

These inputs include Thermo couple tips, mini tips, and clay graphite stopper. The jurisdictional Assistant Commissioner held that these are not eligible inputs for Modvat credit as they are covered by the exclusion clause under Rule 57A according to which for the purpose of Rule 57A "input" does not include machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods in or in relation to the manufacture of final product. The Assistant Commissioner held that these are parts of the machinery, namely, furnace and hence ineligible for Modvat credit. These orders of the Assistant Commissioner were challenged before Commissioner (Appeals), who passed the present combined order dated 28-5-1992. The Commissioner (Appeals) held that graphite electrodes are eligible for Modvat credit. As regards clay graphite stopper, its function is only that of a stopper. The Commissioner (Appeals) held that this item as part of a Machine is covered by the exclusion clause in the definition of input given under Rule 57A. The Commissioner, however, held that thermocouple tips are covered by the term 'input' as they are used in assessing the temperature of molten metal which is necessary in the manufacture of the final product. However, another input of mini tips was held to be ineligible since no declaration for the purpose of Modvat credit has been filed by the appellant in respect of that input.

2. We have heard Shri P.S. Bedi, ld. Consultant appearing for the appellants, who relied upon the Larger Bench decision of the Tribunal, in its Final Order Nos. 1487 to 1502/96-NB, dated 14-6-1996 in the case of Union Carbide India and Ors. v. Commissioner -1996 (86) E.L.T. 613 (Tribunal). We have heard Shri Mewa Singh, the ld. SDR 3. The submissions made have been carefully considered. It is found that although initially Modvat credit was denied by the Assistant Commissioner on thermocouple tips, the Commissioner (Appeals) has held hat these are eligible inputs, so the dispute regarding this input does not survive. In respect of mini tips, the Commissioner (Appeals) has held that there was no declaration by the appellants to include these inputs. But at the same time, the existence of declaration for thermocouple tips is admitted. In such a situation, the mini tips can be reasonably construed as being covered by the declaration of the input thermocouple tips which can be taken as the broader heading for the input. The next issue is regarding clay graphite stopper. The ground for denying Modvat credit is that these are parts of machinery.

On this issue, the Larger Bench decision of the Tribunal would support the appellants' case. It has been held therein that the language of exclusion Clause (i) is plain and clear. It carves out "machines, machinery, plant, equipment, apparatus, tools or appliances...". These expressions indicate a self-contained unit, complete unit or whole unit but not any part thereof, unless of course, such part is also a complete unit in itself. The intention to exclude parts also alongwith machines, machinery and such other goods cannot be gathered from the language used, nor is it spelled out by necessary implication. The ratio of this decision is applicable in this case and accordingly, clay graphite stoppers cannot be held to be covered by the exclusion of the term 'input' under Rule 57A. In the result, it is held that thermocouple tips and mini tips as well as clay graphite stoppers are inputs duly declared intended for use in or in relation to the manufacture of the final product by the appellants. The appeals are allowed.


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