isinox Steels Limited Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. in this batch of six appeals arising out of the common order of the commissioner (appeals) total modvat credit of rs. 24,092/- has been disallowed on pvc armoured cable wires on the ground that these were used for general wiring of the factory and hence were not capital goods within the meaning of the explanation to rule 57q of the central excise rules, 1944 and a total penalty of rs. 12,000/- has been imposed on the appellants who are engaged in the manufacture of wire drawings.3. the authorities below have found that the function of the cable was to carry electricity from the transformer to the switchboard and cables were not used for producing or processing any goods or bring about any change in any substance for the manufacture of final products; on the basis of the diagram of the range superintendent which is annexed to the show cause notice.4. i have gone through the diagram which clearly shows that armoured cables are used between the transformer and the electrical control panel which supplies electricity to various machines and machinery, such as, furnace, etc., which are part of the wire drawing plant. the appellants' contention that the cables are parts and components of the wire drawing plant is therefore correct. applying the ratio of the larger bench decision in the case of cce, coimbatore v. jawahar mills 1999 (108) elt 47 which has been upheld by the apex court as seen from 2001 (132) elt 3 (sc), which held that cables qualify as capital goods under rule 57q to the central excise rules, 1944, i hold that the appellants are entitled to credit on the item in dispute, set aside the impugned order and allow the appeals.

Judgment:
1. In this batch of six appeals arising out of the common order of the Commissioner (Appeals) total modvat credit of Rs. 24,092/- has been disallowed on PVC armoured cable wires on the ground that these were used for general wiring of the factory and hence were not capital goods within the meaning of the explanation to Rule 57Q of the Central Excise Rules, 1944 and a total penalty of Rs. 12,000/- has been imposed on the appellants who are engaged in the manufacture of wire drawings.

3. The authorities below have found that the function of the cable was to carry electricity from the transformer to the switchboard and cables were not used for producing or processing any goods or bring about any change in any substance for the manufacture of final products; on the basis of the diagram of the Range Superintendent which is annexed to the show cause notice.

4. I have gone through the diagram which clearly shows that armoured cables are used between the transformer and the electrical control panel which supplies electricity to various machines and machinery, such as, furnace, etc., which are part of the wire drawing plant. The appellants' contention that the cables are parts and components of the wire drawing plant is therefore correct. Applying the ratio of the larger bench decision in the case of CCE, Coimbatore v. Jawahar Mills 1999 (108) ELT 47 which has been upheld by the apex Court as seen from 2001 (132) ELT 3 (SC), which held that cables qualify as capital goods under Rule 57Q to the Central Excise Rules, 1944, I hold that the appellants are entitled to credit on the item in dispute, set aside the impugned order and allow the appeals.