Escorts Ltd. Vs. Cc and Ce - Court Judgment

Excerpt:
1. the issue in the appeal relates to benefit of modvat credit in respect of the following 4 items of inputs: 2. the learned consultant for the appellants has in respect of the first item pleaded that this is made of fibre glass material with suitable coating and is used for removing the oxide from the alloys when the metal is poured through the same into the pistons. he has pleaded that the use of the item is similar to the use of the wire mesh and danty cloth used in the paper mill. in respect of these items the larger bench of the tribunal in the case of union carbide india ltd. v.collector of central excise, calcutta 18. (i) felt, phospher bronze, stainless steel wire mesh, i'm cloth, dandy doth etc. pulp with excess water comes from the pulp making machine to the paper making machine. pulp is allowed to fall on phospher bronze or stainless steel wire mesh. pulp particles remain on the wire mesh and web of pulp fibre is formed. it moves on moving wire mesh (endless) and is allowed to fall on felt (cotton, woollen or synthetic). the moving felt carries the pulp web to the drier and is calendered or pressed being wound on rolls and treated further. wet paper is passed between dandy rolles covered with dandy cover so as to smoothen the surface of the paper. these articles are damaged in the process and require replacement periodically. they are replaceable goods used in the paper making machine in the course of manufacture of paper. they can be regarded in a way, as parts of the paper making machine or machinery used in the machine or for the purpose of the machine; but by their very purpose, they are goods used in relation to the manufacture of paper or paper products and hence are "inputs" as contemplated in rule 57a.he has pleaded the use being similar inasmuch as these are items which got used up by melting and pouring of the metals the same would be eligible for the benefit of modvat credit under rule 57a.3. the learned jdr for the department has pleaded that they have filed a reference application in respect of the grant of modvat credit for the felts and phosphor wires. he however could not distinguish the ratio cited before us.4. we observe that the ratio of the decision of the larger bench taking into consideration the use of all the items covers the issue and we therefore hold that the benefit of modvat credit as prayed for has to be allowed. ordered accordingly.5. in regard to phosphor copper the learned consultant referred us to the write-up filed in the paper book and also the subsequent order passed by the collector (appeals) wherein he has allowed the benefit of modvat credit in respect of this particular item in the context of the use as is in the present case. it is seen he has pleaded that the item is used as alloying material for the manufacture of alloy metal for the manufacture of pistons in the appellant's factory, being in the nature of raw material he has pleaded the benefit of modvat credit in terms of rule 57a should be admissible.7. we observe inasmuch as the material is used for alloying purposes the same has to be taken to be a raw material used in the manufacturing stream of the notified finished product and we therefore hold that the modvat credit is allowable under rule 57a of the central excise rules.the plea of the appellants in this regard also is therefore allowed.8. in regard to granodine he has pleaded that this is a proprietary product and a chemical for preparation for use of phosphate coating on aluminium pistons to provide better adherence of coating. he has pleaded that the use of the item is a technical necessity for the manufacture of the notified finished product.9. the learned jdr for the department does not dispute the use as pleaded by the learned consultant.10. we observe that inasmuch as the material is used as a technical necessity for the manufacture of the notified finished product, the use of the same has to be held to be in or in relation to the manufacture of the notified finished product. we therefore allow the plea of the appellant for modvat credit in respect of this item.11. in respect of terracot the learned consultant has brought to our notice the earlier order of the tribunal bearing no. 112/1996 dated 15.12.1995 in respect of the very same appellant wherein the tribunal has remanded the matter to the learned lower authority for re-determination of the issue in regard to the admissibility of the modvat credit in respect of this item. he has pleaded that the issue on remand has not yet been decided and has sought for remand of the matter in this regard also in terms of the order of the tribunal above.13. in view of what has been pleaded we remand the matter to the learned lower authority in respect of terracot for decision in terms of what has been stated in the said order and the above order of the tribunal is reproduced below for convenience of reference: in respect of terra cot, since the ratio of west regional bench in the case cited supra was not produced before the adjudicating authority, without expressing any opinion on the merits of the issue we remand this matter to the adjudicating authority to reconsider the ratio and applicability of the ruling in the context of definition of 'terra cot' in relation to the manufacture of the appellants product and give a considered verdict.

Judgment:
1. The issue in the appeal relates to benefit of Modvat Credit in respect of the following 4 items of inputs: 2. The learned Consultant for the appellants has in respect of the first item pleaded that this is made of fibre glass material with suitable coating and is used for removing the oxide from the alloys when the metal is poured through the same into the pistons. He has pleaded that the use of the item is similar to the use of the wire mesh and danty cloth used in the paper mill. In respect of these items the Larger Bench of the Tribunal in the case of Union Carbide India Ltd. v.Collector of Central Excise, Calcutta 18. (i) Felt, Phospher Bronze, Stainless steel wire mesh, I'm cloth, Dandy doth etc. Pulp with excess water comes from the pulp making machine to the paper making machine. Pulp is allowed to fall on phospher bronze or stainless steel wire mesh. Pulp particles remain on the wire mesh and web of pulp fibre is formed. It moves on moving wire mesh (endless) and is allowed to fall on felt (cotton, woollen or synthetic). The moving felt carries the pulp web to the drier and is calendered or pressed being wound on rolls and treated further.

Wet paper is passed between Dandy Rolles covered with Dandy cover so as to smoothen the surface of the paper. These articles are damaged in the process and require replacement periodically. They are replaceable goods used in the paper making machine in the course of manufacture of paper. They can be regarded in a way, as parts of the paper making machine or machinery used in the machine or for the purpose of the machine; but by their very purpose, they are goods used in relation to the manufacture of paper or paper products and hence are "inputs" as contemplated in Rule 57A.He has pleaded the use being similar inasmuch as these are items which got used up by melting and pouring of the metals the same would be eligible for the benefit of Modvat Credit under Rule 57A.3. The learned JDR for the Department has pleaded that they have filed a reference application in respect of the grant of Modvat Credit for the felts and phosphor wires. He however could not distinguish the ratio cited before us.

4. We observe that the ratio of the decision of the Larger Bench taking into consideration the use of all the items covers the issue and we therefore hold that the benefit of Modvat Credit as prayed for has to be allowed. Ordered accordingly.

5. In regard to Phosphor Copper the learned Consultant referred us to the write-up filed in the paper book and also the subsequent order passed by the Collector (Appeals) wherein he has allowed the benefit of Modvat Credit in respect of this particular item in the context of the use as is in the present case. It is seen he has pleaded that the item is used as alloying material for the manufacture of alloy metal for the manufacture of pistons in the appellant's factory, being in the nature of raw material he has pleaded the benefit of Modvat Credit in terms of Rule 57A should be admissible.

7. We observe inasmuch as the material is used for alloying purposes the same has to be taken to be a raw material used in the manufacturing stream of the notified finished product and we therefore hold that the Modvat Credit is allowable under Rule 57A of the Central Excise Rules.

The plea of the appellants in this regard also is therefore allowed.

8. In regard to Granodine he has pleaded that this is a proprietary product and a chemical for preparation for use of phosphate coating on aluminium pistons to provide better adherence of coating. He has pleaded that the use of the item is a technical necessity for the manufacture of the notified finished product.

9. The learned JDR for the Department does not dispute the use as pleaded by the learned Consultant.

10. We observe that inasmuch as the material is used as a technical necessity for the manufacture of the notified finished product, the use of the same has to be held to be in or in relation to the manufacture of the notified finished product. We therefore allow the plea of the appellant for Modvat Credit in respect of this item.

11. In respect of Terracot the learned Consultant has brought to our notice the earlier order of the Tribunal bearing No. 112/1996 dated 15.12.1995 in respect of the very same appellant wherein the Tribunal has remanded the matter to the learned lower authority for re-determination of the issue in regard to the admissibility of the Modvat Credit in respect of this item. He has pleaded that the issue on remand has not yet been decided and has sought for remand of the matter in this regard also in terms of the order of the Tribunal above.

13. In view of what has been pleaded we remand the matter to the learned lower authority in respect of Terracot for decision in terms of what has been stated in the said order and the above order of the Tribunal is reproduced below for convenience of reference: In respect of terra cot, since the ratio of West Regional Bench in the case cited supra was not produced before the adjudicating authority, without expressing any opinion on the merits of the issue we remand this matter to the adjudicating authority to reconsider the ratio and applicability of the ruling in the context of definition of 'terra cot' in relation to the manufacture of the appellants product and give a considered verdict.