Leader Engg. Works Vs. Commissioner of C. Ex. - Court Judgment

Excerpt:
1. these appeals arise out of the orders of the lower authorities denying modvat credit on various inputs which are discussed serialwise in the following paragraphs with our findings thereon based on the submissions made before us by both the parties.2. these inputs are declared, as being those used in or in relation to the manufacture of valves and cooks. the respective inputs are as follows : 1. welding electrodes :- we find that the assistant commissioner in the case of welding electrodes has held in the order giving rise to the present appeal that these are in the nature of tools or appliances for denying the modvat credit. however, it has been shown before us that the same authority, subsequently, has held in his order no. 108/d/ac/89, dated [10-11-1989] on further examination of the issue, that these welding rods are used for filling up cavity in the castings and are consumable items meriting to be - inputs for modvat credit purposes. therefore, on the original authorities' own findings, as above, the denial of modvat credit is not justified and we accordingly order that it be allowed. 2. copper/copper scrap :- the department has denied deemed credit under rule 57g of c.e. rules on this input. it was fairly submitted before us that out of the amount of deemed credit involved of rs. 4,692.49, only an amount of rs. 705.00 can be held to be clearly recognisable as non-duty paid having been obtained from manufacturers enjoying exemption, but the balance, it was submitted had been purchased from the open markets from dealers and should be extended deemed credit. it was, further, submitted that the appellants have the documents like invoice to show such purchase. we, therefore, order that in respect of this item, the assistant commissioner may examine the claim afresh and if satisfied about their duty paid nature may extend deemed credit. 3. silicon carbide grains :- the assistant commissioner has denied modvat credit on this item holding that the final product can be manufactured even without the use of this item and also that it does not form part of the final product. in this case also, we find that subsequently the same authority in his order no. 16-17/ac/d/93, dated 23-2-1993 in the case of the same appellants, has taken the view agreeing with the appellants that it is not necessary for availing modvat credit that the input must form part of the final product and also expressing the view that smoothing and going the surfaces forms essential part of manufacture of gate valves. on this basis, he had allowed modvat credit and having done so, we do not see any reason for the deptt. to deny it in respect of the same appellants in the impugned order before us. it is, therefore, held that modvat credit on silicon carbide grains is permissible to the appellants. 4. valve actuator : - this forms component parts of the final product, valves. the only ground on which modvat credit has been denied on this input is that the appellants have not amended their declaration to correctly indicate its classification under chapter 85 after the classification was changed at the suppliers end from chapter 90 to chapter 85. however, we find that this is not a valid ground for denying the modvat credit so long as the description of the inputs which has been received on payment of duty from the suppliers tallies with the description of the inputs as declared under rule 57g by the appellants. therefore, the non-amendment of the classification of the inputs in their declaration, is not such a serious infirmity as to be fatal to their claim for modvat credit. we, therefore, order that this be allowed. 5. fibre jointing sheet :- this input is used as washers in their final product after the sheet which is received, is cut to size. this is used for preventing leakages and keeping the pressure tight at the joints. it has been submitted before us that the item is not exothermic material because such material is used at a much earlier stage of casting in the manufacturing process. therefore, on finding that these are used in the valves discharging the function as of washer, they are eligible for modvat credit as input used in the manufacture of the final product. we order accordingly. 6. a.s. rounds :- deemed credit on this input has been denied only on the ground that the certificate of sail in the challan for giving the duty payment particulars, have been left blank. we find that this is so although the certificate is signed but the blanks are left unfilled. however, we find that the duty payment particulars are available in this challan against columns 11, 12 & 13 thereof also gives pla number, the tariff heading and the rate of duty. in these circumstances, as a special case, the blank certificate, though signed, may be considered as condonable lapse on the facts of this case. the deemed credit may be allowed to them. as regards certain other inputs, aluminium and brass scrap, copper wire, pig iron, body bonnet, aluminium ingots and aluminium bronze rods, the appellants did not press their claim in respect of these items.the appeals are disposed in the above terms in respect of the items ned above for the purpose of eligibility to modvat credit.

Judgment:
1. These appeals arise out of the orders of the lower authorities denying Modvat credit on various inputs which are discussed serialwise in the following paragraphs with our findings thereon based on the submissions made before us by both the parties.

2. These inputs are declared, as being those used in or in relation to the manufacture of valves and cooks. The respective inputs are as follows : 1. Welding Electrodes :- We find that the Assistant Commissioner in the case of welding electrodes has held in the order giving rise to the present appeal that these are in the nature of tools or appliances for denying the Modvat credit. However, it has been shown before us that the same authority, subsequently, has held in his Order No. 108/D/AC/89, dated [10-11-1989] on further examination of the issue, that these welding rods are used for filling up cavity in the castings and are consumable items meriting to be - inputs for Modvat credit purposes. Therefore, on the original authorities' own findings, as above, the denial of Modvat credit is not justified and we accordingly order that it be allowed.

2. Copper/Copper scrap :- The department has denied deemed credit under Rule 57G of C.E. Rules on this input. It was fairly submitted before us that out of the amount of deemed credit involved of Rs. 4,692.49, only an amount of Rs. 705.00 can be held to be clearly recognisable as non-duty paid having been obtained from manufacturers enjoying exemption, but the balance, it was submitted had been purchased from the open markets from dealers and should be extended deemed credit. It was, further, submitted that the appellants have the documents like invoice to show such purchase.

We, therefore, order that in respect of this item, the Assistant Commissioner may examine the claim afresh and if satisfied about their duty paid nature may extend deemed credit.

3. Silicon Carbide Grains :- The Assistant Commissioner has denied Modvat credit on this item holding that the final product can be manufactured even without the use of this item and also that it does not form part of the final product. In this case also, we find that subsequently the same authority in his Order No. 16-17/AC/D/93, dated 23-2-1993 in the case of the same appellants, has taken the view agreeing with the appellants that it is not necessary for availing Modvat credit that the input must form part of the final product and also expressing the view that smoothing and going the surfaces forms essential part of manufacture of gate valves. On this basis, he had allowed Modvat credit and having done so, we do not see any reason for the deptt. to deny it in respect of the same appellants in the impugned order before us. It is, therefore, held that Modvat credit on silicon carbide grains is permissible to the appellants.

4. Valve Actuator : - This forms component parts of the final product, valves. The only ground on which Modvat credit has been denied on this input is that the appellants have not amended their declaration to correctly indicate its classification under Chapter 85 after the classification was changed at the suppliers end from Chapter 90 to Chapter 85. However, we find that this is not a valid ground for denying the Modvat credit so long as the description of the inputs which has been received on payment of duty from the suppliers tallies with the description of the inputs as declared under Rule 57G by the appellants. Therefore, the non-amendment of the classification of the inputs in their declaration, is not such a serious infirmity as to be fatal to their claim for Modvat credit.

We, therefore, order that this be allowed.

5. Fibre Jointing Sheet :- This input is used as washers in their final product after the sheet which is received, is cut to size.

This is used for preventing leakages and keeping the pressure tight at the joints. It has been submitted before us that the item is not exothermic material because such material is used at a much earlier stage of casting in the manufacturing process. Therefore, on finding that these are used in the valves discharging the function as of washer, they are eligible for Modvat credit as input used in the manufacture of the final product. We order accordingly.

6. A.S. Rounds :- Deemed credit on this input has been denied only on the ground that the certificate of SAIL in the challan for giving the duty payment particulars, have been left blank. We find that this is so although the certificate is signed but the blanks are left unfilled. However, we find that the duty payment particulars are available in this challan against columns 11, 12 & 13 thereof also gives PLA number, the tariff heading and the rate of duty. In these circumstances, as a special case, the blank certificate, though signed, may be considered as condonable lapse on the facts of this case. The deemed credit may be allowed to them.

As regards certain other inputs, aluminium and brass scrap, copper wire, pig iron, body bonnet, aluminium ingots and aluminium bronze rods, the appellants did not press their claim in respect of these items.

The appeals are disposed in the above terms in respect of the items ned above for the purpose of eligibility to Modvat credit.