Commissioner of Central Excise Vs. Associated Cement Company Ltd. - Court Judgment

Excerpt:
1. this reference application is filed by the revenue to refer the following question on the ground that point of law arises with reference to the order no. 52/97-d, dated 13-1-1997 passed by the tribunal. "whether grinding media used for grinding lime stone, coal and clinker, should be considered as input in or in relation to the manufacture of cement or the grinding media should be treated as covered by exclusion clause-i of explanation under rule 57a of the central excise rules, 1944 and therefore, not entitled to modvat credit." 2. shri r.s. sangia, learned departmental representative appearing for the revenue submitted that board has not accepted the view taken by the tribunal in the case of indian rayon & industries ltd. v. collector of central excise, reported in 1995 (76) e.l.t. 358 (tribunal) as well as the decision in the case of union carbide india ltd. v. collector of central excise, reported in 1996 (86) e.l.t. 613 (tribunal) and accordingly the department has filed slp in the supreme court of india.he requested that some more time may be given to enable him to ascertain the factual position with reference to the matter before the supreme court.3. shri y. adhyaru, learned advocate appearing for the respondents submitted that last time also matter was adjourned on the same plea taken by the department.4. in the instant case the issue relates to dential of modvat credit in respect of grinding media. it was claimed by the party that grinding media was used in relation to the manufacture of cement, accordingly the inputs was entitled to modvat credit. this has been denied by the assistant collector and the view taken by the assistant collector was upheld by the collector (appeals).5. on appeal filed by the party on going through the issue involved in this case, the tribunal was of the view that the issue has been covered by the union carbide india ltd. v. collector of central excise (supra) wherein the larger bench of the tribunal has taken the view that the word 'inputs' in relation to the manufacture has been used to widen and expand the scope, meaning and content of the expression 'inputs' so as to attract also goods which do not enter directly or indirectly into finished product but are used in any activity concerned with or pertaining to the manufacture of finished goods. further, it was observed that the exclusion clause in explanation to rule 57a excludes machinery or units and not parts thereof. accordingly it was held since part as such is not specifically excluded and the item was used in relation to the manufacture of the finished products and the same is eligible for modvat credit.6. filing the slp against the earlier decision, is not a ground to adjourn the matter as it was rightly pointed by the respondents' counsel. in the case of ngef ltd. v. collector of central excise, bangalore, reported in 1996 (87) e.l.t. 722 (tribunal) the tribunal has taken the view that finding of tribunal about non-eligibility of steel barrels of modvat credit is purely a finding of fact on the basis of evidence and not give rise to a question of law. hence based upon the facts deciding the issue whether an item is eligible inputs or not is purely a question of fact and in the view taken by the tribunal, it cannot be said that this is a question of law to be referred to the high court. with this view the reference application filed by the department is hereby rejected.

Judgment:
1. This Reference application is filed by the Revenue to refer the following question on the ground that point of law arises with reference to the Order No. 52/97-D, dated 13-1-1997 passed by the Tribunal.

"Whether grinding media used for grinding lime stone, coal and clinker, should be considered as input in or in relation to the manufacture of Cement or the grinding media should be treated as covered by exclusion Clause-I of explanation under Rule 57A of the Central Excise Rules, 1944 and therefore, not entitled to Modvat credit." 2. Shri R.S. Sangia, learned Departmental Representative appearing for the Revenue submitted that Board has not accepted the view taken by the Tribunal in the case of Indian Rayon & Industries Ltd. v. Collector of Central Excise, reported in 1995 (76) E.L.T. 358 (Tribunal) as well as the decision in the case of Union Carbide India Ltd. v. Collector of Central Excise, reported in 1996 (86) E.L.T. 613 (Tribunal) and accordingly the department has filed SLP in the Supreme Court of India.

He requested that some more time may be given to enable him to ascertain the factual position with reference to the matter before the Supreme Court.

3. Shri Y. Adhyaru, learned Advocate appearing for the respondents submitted that last time also matter was adjourned on the same plea taken by the department.

4. In the instant case the issue relates to dential of Modvat credit in respect of grinding media. It was claimed by the party that grinding media was used in relation to the manufacture of cement, accordingly the inputs was entitled to Modvat credit. This has been denied by the Assistant Collector and the view taken by the Assistant Collector was upheld by the Collector (Appeals).

5. On appeal filed by the party on going through the issue involved in this case, the Tribunal was of the view that the issue has been covered by the Union Carbide India Ltd. v. Collector of Central Excise (supra) wherein the Larger Bench of the Tribunal has taken the view that the word 'inputs' in relation to the manufacture has been used to widen and expand the scope, meaning and content of the expression 'inputs' so as to attract also goods which do not enter directly or indirectly into finished product but are used in any activity concerned with or pertaining to the manufacture of finished goods. Further, it was observed that the exclusion clause in Explanation to Rule 57A excludes machinery or units and not parts thereof. Accordingly it was held since part as such is not specifically excluded and the item was used in relation to the manufacture of the finished products and the same is eligible for Modvat credit.

6. Filing the SLP against the earlier decision, is not a ground to adjourn the matter as it was rightly pointed by the respondents' Counsel. In the case of NGEF Ltd. v. Collector of Central Excise, Bangalore, reported in 1996 (87) E.L.T. 722 (Tribunal) the Tribunal has taken the view that finding of Tribunal about non-eligibility of steel barrels of Modvat credit is purely a finding of fact on the basis of evidence and not give rise to a question of law. Hence based upon the facts deciding the issue whether an item is eligible inputs or not is purely a question of fact and in the view taken by the Tribunal, it cannot be said that this is a question of law to be referred to the High Court. With this view the Reference Application filed by the department is hereby rejected.