BANNARI AMMAN SUGARS LIMITED (REPRESENTED BY MR. P. MANICKAVASAGAN, GENERAL MANAGER) Vs. THE COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE assessee on being denied the Modvat credit facility by the Original Authority, Appellate Authority and as confirmed by the Tribunal is before this Court challenging the order of the Tribunal by formulating the questions of law which at the time of admission of appeal on 3 -7 -2006 was re -framed as follows: (i) whether under the facts and in the circumstances of the case, the Tribunal was right in ignoring the definition of "capital goods" set out in Rule 57AA(a) of the Central excise Rules, 1944 and Rule 2(b) of the Cenvat Credit Rules, 2001 wherein "storage tanks" are specifically stated to be capital goods? (ii) Whether under the facts and in the circumstances of the case, the Tribunal was right in ignoring the definition of "inputs" set out in the 57AA(d) of the Central Excise Rules, 1944 and Rule 2(f) of the Cenvat Credit Rules, 2001, as per which inputs include goods used in the manufacture of capital goods, which are further used in the factory of the manufacturer? (iii) Whether under the facts and circumstances of the case, the Tribunal's order having held at para 6 that storage tanks are not immovable property, is correct in denying Cenvat Credit on the basis of self contradictory findings?.

(2.) THE appellant contends that Tribunal was in error in confirming the order of the first Appellate Authority by denying the Modvat Credit facility of credit inputs used in the manufacture of molasses storage tank in the sugar factory of the assessee on the ground that erection of the storage tank as per pollution laws was mandatorily required for the appellant to instal the said storage tank by using of steel as input.

(3.) SRI . Ravishankar would contend that the first Appellate Authority as well as the Tribunal were in error in not considering Rule 57AA in its proper perspective and word storage tank has been inserted in the said rule by way of an amendment by issuing of notification No. 6/2001 C.E (N.T), dated 1 -3 -2001. He would submit that on account of non -consideration of this vital aspect by the Appellate Authority has resulted in denial of Modvat Credit. He would also submit that Appellate Authority well as the Tribunal have mis -construed the interpretation of the rule and the denial of the Modvat credit to the assessee. Elaborating his submission he would contend that in respect of the very same issue i.e., with regard to extending the Cenvat/Modvat credit facility in respect of the storage tank in the case of KCP Ltd. v. Commissioner of Central Excise, Guntur decided on 13 -10 -2008. The very same Tribunal has granted the relief and hence the present order of the Tribunal suffers from infirmity and there is no justification for the appellant being singled out. He would also submit that in the explanation to Rule 57AA it is clarified that the capital goods do not include any equipment or appliance used in the office and it has to be held that all other goods would fall within the category of capital goods and particularly with reference to the storage tank.