CCE Vs. SCHABLONA INDIA LTD.

JUDGEMENT

(1.) This is an appeal filed by the Revenue against the order dated 17.2.1999 passed by the Commissioner (Appeals), Central Excise, New Delhi. The brief facts of the case are that the respondents are engaged in the manufacture of Ceramic Transfers falling under sub heading 4901.10 of Central Excise Tariff Act, 1985 (for short Act) and are availing modvat facility under Rule 57 -A/57 -Q of Central Excise Rules, 1944 (for short Rules). The respondents availed modvat credit under Rule 57 -Q on Air Cooled Air Conditioners and Environment Control systems imported by them to the tune of Rs. 4,67,845/ -which was disallowed on the ground that the goods were not used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final product and as such, do not come under the purview of definition of capital goods given in Explanation to Rule 57 -Q. A penalty of Rs. 4,000/ - was also imposed under Rule 173 -Q(bb) of the Rules.

(2.) The learned JDR Shri B.C. Mahey appearing on behalf of the Revenue has submitted that the functions of air cooled, air conditioners and environment control systems are same. He has drawn my attention to -wards ground No. 1 at page 3 of the grounds of appeal which says that the goods in which the party had taken modvat credit i.e. on air cooled air conditioners and environment control systems, were not capital goods under Rule 57 -Q as they are not used for production or processing of any goods or for bringing about any change in any substance for the manufacture of a product. The learned DR in support of his contention relied on the decision in the case of JK Pharma and Chem. Ltd and the case of India Glycols Ltd. Tribunal. In both the cases, the Tribunal has held that the air conditioners do not qualify as capital goods and hence not eligible for modvat credit.

(3.) Shri Nand Kishor, learned Advocate has appeared on behalf of the respondents and he has submitted that the modvat credit is admissible on the capital goods in dispute in view of the following decisions: