Commissioner of C. Ex. Vs. S.S.P.E. Cotton Mills (P) Ltd. - Court Judgment

Excerpt:
1. this is a revenue appeal against order-in-appeal no. 31/97 (cbe), dated 30-1-1997 passed by commissioner (appeals) wherein modvat credit has been allowed on the following :- (c) weighing machines used to weigh the raw material i.e. cotton fibres (d) modvat credit has also been allowed in respect of invoice which contains both the dealer's name as well as the respondents' name because the goods were purchased through dealer but directly supplied to the respondents' factory and used therein.2. heard shri r. victor thiagaraj, learned sdr for revenue and shri s.kandaswamy, learned consultant for the respondents.3. there is also a petition on record from the respondents submitting that two other appeals no. e/1380/97 & e/1382/97 could also been heard along with this appeal. however, those appeals are not listed for today. learned consultant was informed of this and he submitted that he prefers that this be heard today as listed and the other two appeals could be heard at a later date.4. learned sdr has no objection to this. accordingly, the subject appeal no. e/1381/97 is now under consideration.5. learned sdr reiterates the facts of the case and submits that as far as transformers are concerned, the reliance of commissioner (appeals) in the impugned order in the case of m.m. forgings is not legally correct as the said order has not become final because the revenue has filed a reference application against the same which is pending.further, he submits that reliance by commissioner (appeals) in the case of indian rayon industries ltd., reported in 1996 (88) e.l.t. 381 (tribunal) for credit on transformers has also been similarly appealed against. he relies on the decision in the case of velathal spinning mills (p) ltd. and shanmugaraja spinning mills (p) ltd. as detailed in the grounds of appeal. with respect to duty paying document, he cites the case of jai bhavani steel industries (p) ltd., reported in 1996 (83) e.l.t. 537.6. heard learned consultant who submits that on all the four issues, the subject matter is covered by a number of decisions of various benches of this tribunal as follows :- (1) transformers -1998 (97) e.l.t. 127 (tribunal) - nahar spinning mills ltd. & 1998 (100) e.l.t. 474 (tribunal) - bhushan steels & strips ltd. (2) air compressor not used in refrigerating machinery -1997 (96) e.l.t. 404 - modern petrofils.c.c.e. v. carborundum universal ltd.; 1996 (88) e.l.t. 530 (tribunal) - modi xerox ltd.; 1997 (90) e.l.t. 214 (tribunal) - modi xerox ltd. (4) regarding invoice containing both the dealer's name as well as respondents' name, he cited the decision of srb in 1997 (93) e.l.t. 357 (tribunal) in the case of carborundam universal ltd. 7. learned consultant therefore submits that all the issues are already covered by these decisions and therefore the matter is no longer res integra and prays that the ratio thereof should be applied to this case and the revenue's appeal dismissed.8. i have carefully considered the arguments on both sides and the records of the case and find as follows :- (a) with respect to availability of modvat credit under capital goods on transformers, i find that the issue is squarely covered by the two decisions cited by the learned consultant supra namely 1998 (97) e.l.t. 127 (tribunal) : 1998 (100) e.l.t. 474 (tribunal) wherein it has been held that transformers are eligible capital goods under rule 57q. i also find that similar decision on transformers is also available in 1997 (96) e.l.t. 404 (tribunal) in the case of modern petrofils which, in turn, has relied on the decision in 1996 (88) e.l.t. 381 (tribunal) in the case of indian rayons industries ltd. i, therefore, find that as far as transformers are concerned, the issue is clearly settled one and the same are eligible to modvat credit as capital goods under rule 57q in view of plethora of decisions cited supra. (b) learned consultant has clearly submitted that the air compressors are not used for or in conjunction with any refrigeration machinery but are used in the blow room and at the carding machine. the blow room and carding machine are integral to the manufacture of the final product namely yarn. i find that in the case of modern petrofils -1997 (96) e.l.t. 404 (tribunal), it has been clearly held that air compressors other than of a kind used in refrigerating and air conditioning appliances are eligible for modvat credit though included in the definition of capital goods only with effect from 16-3-1995. in this decision, the west zonal bench of the tribunal has also relied on 1996 (86) e.l.t. 501 in the case of nav bharat paper mills ltd. i, therefore, find that since it is not on record that the said air compressors are used in connection with refrigerating or air conditioning appliances, therefore, the decisions cited supra are clearly applicable to the facts of this case and the said air compressor is eligible for modvat credit as 'capital goods.' (c) with respect to weighing machines, i also find that the matter is no longer res integra as it is covered by the following decisions :- 1997 (93) e.l.t. 357 (tribunal) wherein it has been held that weighment of materials can be regarded as akin to handling and therefore weighing machines would fall within the definition of capital goods under rule 57q. to arrive at this decision, the hon'ble bench has followed the case of rajasthan state chemicals reported in 1991 (55) e.l.t. 444 (s.c). i also find that similar views have been taken in 1996 (88) e.l.t. 530 (tribunal) by the hon'ble west regional bench and again in 1997 (90) e.l.t. 214 (tribunal). therefore, i find that it is clearly settled law that weighing machines, which in this case are required to weigh rawmaterial i.e. cotton, are clearly covered by the definition of 'capital goods' under rule 57q and therefore are eligible to modvat credit accordingly. (d) with respect to invoice no. 3565, dated 11-10-1994, it is alleged in revenue's appeal that it is not a proper document for taking credit as the same has not been addressed to the respondents here. the invoice is available on the paper book and the same has been perused. it is addressed to m/s. pr associates of coimbatore but on account of the present respondents. learned consultant has explained that department does not dispute that the goods under this invoice were duly duty paid; that they were received in the factory of respondents' and they were used eligibly under the modvat scheme. the only dispute is that invoice also bears the name of m/s. pr associates. learned consultant has submitted that this is the name of the dealers through which the order was placed but from the fact that the respondents' name is also mentioned on the invoice, it is clear that they were the final consignee of these goods. in view of this and in view of the fact that there is no dispute that the duty paid goods actually reached the respondents' factory and were used in the factory itself, therefore, modvat credit should not be denied legally.8. learned sdr has submitted that in view of the fact that the consignee is m/s. pr associates and the respondents' name is only in respect to "a/c", therefore it becomes an endorsed gate pass and therefore the gate pass is not in the name of the respondents and therefore in view of the case of jai bhawani steel industries cited supra, the document is not a proper doucument.9. i have gone through the decision in the case of jai bhawani steel industries cited supra. i find that the said decision was in connection with the subsidiary gate pass which had been endorsed. in this case, the invoice is not a subsidiary gate pass and neither is it endorsed inasmuch as that m/s. pr associates have not endorsed it in favour of the present respondents. it is clear from the invoice that the said document contains the name of both the parties i.e. m/s. pr associates as well as respondents'. when this is viewed with the fact that it is not disputed that the goods under this invoice actually were received by the respondents and were installed in their factory premises for use in the manufacturing process, then it is clear that the said invoice cannot be said to be not a proper document. to arrive at this conclusion, i am supported by the decision, of this very tribunal in the case of carborundam universal ltd., as reported in 1997 (93) e.l.t.357 (tribunal), wherein even a worse case has been considered wherein the invoice was not showing consignee's name and address at all and still in view of the fact that the goods were found to have reached the consignee, therefore the omission was not considered sufficient for denial of modvat credit. in this case, i am in agreement with the submission of the learned consultant that the respondents' name clearly appears on the body of the document itself and therefore modvat credit is found to be available on this invoice to the respondents.10. in view of the findings above, i find that there is no merit in the revenue's appeal and the same is dismissed.

Judgment:
1. This is a Revenue appeal against Order-in-Appeal No. 31/97 (CBE), dated 30-1-1997 passed by Commissioner (Appeals) wherein Modvat credit has been allowed on the following :- (c) Weighing Machines used to weigh the raw material i.e. Cotton Fibres (d) Modvat credit has also been allowed in respect of invoice which contains both the dealer's name as well as the respondents' name because the goods were purchased through dealer but directly supplied to the respondents' factory and used therein.

2. Heard Shri R. Victor Thiagaraj, learned SDR for Revenue and Shri S.Kandaswamy, learned Consultant for the respondents.

3. There is also a petition on record from the respondents submitting that two other Appeals No. E/1380/97 & E/1382/97 could also been heard along with this appeal. However, those appeals are not listed for today. Learned Consultant was informed of this and he submitted that he prefers that this be heard today as listed and the other two appeals could be heard at a later date.

4. Learned SDR has no objection to this. Accordingly, the subject Appeal No. E/1381/97 is now under consideration.

5. Learned SDR reiterates the facts of the case and submits that as far as transformers are concerned, the reliance of Commissioner (Appeals) in the impugned order in the case of M.M. Forgings is not legally correct as the said order has not become final because the Revenue has filed a reference application against the same which is pending.

Further, he submits that reliance by Commissioner (Appeals) in the case of Indian Rayon Industries Ltd., reported in 1996 (88) E.L.T. 381 (Tribunal) for credit on transformers has also been similarly appealed against. He relies on the decision in the case of Velathal Spinning Mills (P) Ltd. and Shanmugaraja Spinning Mills (P) Ltd. as detailed in the grounds of appeal. With respect to duty paying document, he cites the case of Jai Bhavani Steel Industries (P) Ltd., reported in 1996 (83) E.L.T. 537.

6. Heard learned Consultant who submits that on all the four issues, the subject matter is covered by a number of decisions of various Benches of this Tribunal as follows :- (1) Transformers -1998 (97) E.L.T. 127 (Tribunal) - Nahar Spinning Mills Ltd. & 1998 (100) E.L.T. 474 (Tribunal) - Bhushan Steels & Strips Ltd. (2) Air Compressor not used in refrigerating machinery -1997 (96) E.L.T. 404 - Modern Petrofils.C.C.E. v. Carborundum Universal Ltd.; 1996 (88) E.L.T. 530 (Tribunal) - Modi Xerox Ltd.; 1997 (90) E.L.T. 214 (Tribunal) - Modi Xerox Ltd. (4) Regarding invoice containing both the dealer's name as well as respondents' name, he cited the decision of SRB in 1997 (93) E.L.T. 357 (Tribunal) in the case of Carborundam Universal Ltd. 7. Learned Consultant therefore submits that all the issues are already covered by these decisions and therefore the matter is no longer res integra and prays that the ratio thereof should be applied to this case and the Revenue's appeal dismissed.

8. I have carefully considered the arguments on both sides and the records of the case and find as follows :- (A) With respect to availability of Modvat credit under Capital Goods on Transformers, I find that the issue is squarely covered by the two decisions cited by the learned Consultant supra namely 1998 (97) E.L.T. 127 (Tribunal) : 1998 (100) E.L.T. 474 (Tribunal) wherein it has been held that transformers are eligible capital goods under Rule 57Q. I also find that similar decision on transformers is also available in 1997 (96) E.L.T. 404 (Tribunal) in the case of Modern Petrofils which, in turn, has relied on the decision in 1996 (88) E.L.T. 381 (Tribunal) in the case of Indian Rayons Industries Ltd. I, therefore, find that as far as Transformers are concerned, the issue is clearly settled one and the same are eligible to Modvat credit as capital goods under Rule 57Q in view of plethora of decisions cited supra.

(B) Learned Consultant has clearly submitted that the Air Compressors are not used for or in conjunction with any refrigeration machinery but are used in the blow room and at the carding machine. The Blow room and Carding machine are integral to the manufacture of the final product namely yarn. I find that in the case of Modern Petrofils -1997 (96) E.L.T. 404 (Tribunal), it has been clearly held that Air Compressors other than of a kind used in refrigerating and air conditioning appliances are eligible for Modvat credit though included in the definition of capital goods only with effect from 16-3-1995. In this decision, the West Zonal Bench of the Tribunal has also relied on 1996 (86) E.L.T. 501 in the case of Nav Bharat Paper Mills Ltd. I, therefore, find that since it is not on record that the said Air Compressors are used in connection with refrigerating or air conditioning appliances, therefore, the decisions cited supra are clearly applicable to the facts of this case and the said Air Compressor is eligible for Modvat credit as 'capital goods.' (C) With respect to weighing machines, I also find that the matter is no longer res integra as it is covered by the following decisions :- 1997 (93) E.L.T. 357 (Tribunal) wherein it has been held that weighment of materials can be regarded as akin to handling and therefore weighing machines would fall within the definition of capital goods under Rule 57Q. To arrive at this decision, the Hon'ble Bench has followed the case of Rajasthan State Chemicals reported in 1991 (55) E.L.T. 444 (S.C). I also find that similar views have been taken in 1996 (88) E.L.T. 530 (Tribunal) by the Hon'ble West Regional Bench and again in 1997 (90) E.L.T. 214 (Tribunal). Therefore, I find that it is clearly settled law that weighing machines, which in this case are required to weigh rawmaterial i.e. cotton, are clearly covered by the definition of 'capital goods' under Rule 57Q and therefore are eligible to Modvat credit accordingly.

(D) With respect to Invoice No. 3565, dated 11-10-1994, it is alleged in Revenue's appeal that it is not a proper document for taking credit as the same has not been addressed to the respondents here. The invoice is available on the paper book and the same has been perused. It is addressed to M/s. PR Associates of Coimbatore but on account of the present respondents. Learned Consultant has explained that department does not dispute that the goods under this invoice were duly duty paid; that they were received in the factory of respondents' and they were used eligibly under the Modvat scheme.

The only dispute is that invoice also bears the name of M/s. PR Associates. Learned Consultant has submitted that this is the name of the dealers through which the order was placed but from the fact that the respondents' name is also mentioned on the invoice, it is clear that they were the final consignee of these goods. In view of this and in view of the fact that there is no dispute that the duty paid goods actually reached the respondents' factory and were used in the factory itself, therefore, Modvat credit should not be denied legally.

8. Learned SDR has submitted that in view of the fact that the consignee is M/s. PR Associates and the respondents' name is only in respect to "A/c", therefore it becomes an endorsed gate pass and therefore the gate pass is not in the name of the respondents and therefore in view of the case of Jai Bhawani Steel Industries cited supra, the document is not a proper doucument.

9. I have gone through the decision in the case of Jai Bhawani Steel Industries cited supra. I find that the said decision was in connection with the subsidiary gate pass which had been endorsed. In this case, the invoice is not a subsidiary gate pass and neither is it endorsed inasmuch as that M/s. PR Associates have not endorsed it in favour of the present respondents. It is clear from the invoice that the said document contains the name of both the parties i.e. M/s. PR Associates as well as respondents'. When this is viewed with the fact that it is not disputed that the goods under this invoice actually were received by the respondents and were installed in their factory premises for use in the manufacturing process, then it is clear that the said invoice cannot be said to be not a proper document. To arrive at this conclusion, I am supported by the decision, of this very Tribunal in the case of Carborundam Universal Ltd., as reported in 1997 (93) E.L.T.357 (Tribunal), wherein even a worse case has been considered wherein the invoice was not showing consignee's name and address at all and still in view of the fact that the goods were found to have reached the consignee, therefore the omission was not considered sufficient for denial of Modvat credit. In this case, I am in agreement with the submission of the learned Consultant that the respondents' name clearly appears on the body of the document itself and therefore Modvat credit is found to be available on this invoice to the respondents.

10. In view of the findings above, I find that there is no merit in the Revenue's appeal and the same is dismissed.