Collector of Central Excise Vs. Madhya Bharat Papers Ltd. - Court Judgment

Excerpt:
1. the issue for determination in this appeal filed by the revenue against the order of the collector of central excise (appeals), raipur is the eligibility to modvat credit on dandy covers, dryer felt, press felt, industrial cloth and synthetic cloth used on paper machine by the respondents herein who are engaged in the manufacture of paper falling under chapter 48 of the schedule to the ceta, 1985. today's date was noted by the respondent's advocate; however, none appears on their behalf when the case is called nor is there any request for adjournment. hence, we heard the learned dr and perused the records and pass the following order.2. we find that the department contends that all the items mentioned above are in the nature of parts of paper machine and are, therefore, excluded from the coverage of inputs under rule 57a of the central excise rules, 1944. in the case of straw products ltd. v. cces and customs reported in 1992 (59) e.l.t. 572, the tribunal while considering the eligibility to benefit of modvat credit on items such as felt etc., used in paper making, held that parts of machines are not excluded from the scope of inputs under rule 57a. the larger bench decision in the case of union carbide v. collector of central excise, calcutta reported in 1996 (86) e.l.t. 613 upheld the decision in the case of straw products. the relevant paragraphs of the larger bench decision are paras 23 to 26 and 28. since the larger bench has already held that the items such as felt, wire mesh and synthetic cloth which are parts of machines are not covered by the exclusion clause of the explanation to rule 57a, we hold that the items are eligible for credit; accordingly we uphold the impugned order and reject the appeal.

Judgment:
1. The issue for determination in this appeal filed by the Revenue against the order of the Collector of Central Excise (Appeals), Raipur is the eligibility to Modvat credit on dandy covers, dryer felt, press felt, industrial cloth and synthetic cloth used on paper machine by the respondents herein who are engaged in the manufacture of paper falling under Chapter 48 of the Schedule to the CETA, 1985. Today's date was noted by the respondent's Advocate; however, none appears on their behalf when the case is called nor is there any request for adjournment. Hence, we heard the learned DR and perused the records and pass the following order.

2. We find that the Department contends that all the items mentioned above are in the nature of parts of paper machine and are, therefore, excluded from the coverage of inputs under Rule 57A of the Central Excise Rules, 1944. In the case of Straw Products Ltd. v. CCES and Customs reported in 1992 (59) E.L.T. 572, the Tribunal while considering the eligibility to benefit of Modvat credit on items such as felt etc., used in paper making, held that parts of machines are not excluded from the scope of inputs under Rule 57A. The Larger Bench decision in the case of Union Carbide v. Collector of Central Excise, Calcutta reported in 1996 (86) E.L.T. 613 upheld the decision in the case of Straw Products. The relevant paragraphs of the Larger Bench decision are Paras 23 to 26 and 28. Since the Larger Bench has already held that the items such as felt, wire mesh and synthetic cloth which are parts of machines are not covered by the exclusion clause of the explanation to Rule 57A, we hold that the items are eligible for credit; accordingly we uphold the impugned order and reject the appeal.