Y.K. Sabharwal, J. - (1.) In this batch of appeals the only point in issue in regarding availing of Modvat Credit in respect of certain items by the manufacturers treating those items as 'Capital goods' in terms of Rule 57-Q of the Central Excise Rules, 1944. The controversy was whether those items were 'Capital goods' or not within the meaning of Rule 57-Q .
(2.) Rule 57-Q was introduced by Notification No. 4/94-CE dated 1 March, 1994. It enabled manufacturers to claim Modvat Credit of duty paid on 'Capital goods' used in their factory. The expression 'Capital goods' has been defined in the Explanation to Rule 57-Q. For the proper appreciation of the controversy between the parties it would be convenient to reproduce Rule 57-Q along with its Explanation. It reads as under : "57-Q. Applicability.- (1) The provisions of this section shall apply to finished excisable goods of the description specified in the Annexure below (hereinafter referred to as the 'final products') for the purpose of allowing credit of specified duty paid on the 'Capital goods' used by the manufacturer in his factory and for utilizing the credit so allowed towards payment of duty of excise leviable in the final products, or as the case may be, on such capital goods, if such capital goods have been permitted to be cleaned under rule 57-S, subject to the provisions of this section and the conditions and restrictions as Central Government may specify in this behalf : Provided that credit of specified duty in respect of any capital goods produced or manufactured- (a) in a free trade zone and used for the manufacture of final products in any other place in India; or (b) by a hundred per cent export-oriented undertaking or by a unit in an Electronic Hardware Technology Park and used for the manufacture of final products in any place in India, shall be restricted to the extent of duty which is equal to the additional duty leviable on like goods under Section 3 of the Customs Tariff Act, 1975 (51 of 1975) equivalent to the duty of excise paid on such capital goods. Explanation.- For the purposes of this section,- (1) 'capital goods' means- (a) machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products; (b) components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose; and (c) moulds and dies, generating sets and weigh-bridges used in the factory of the manufacturer. (1) 'specified duty' means duty of excise or the additional duty under Section 3 of the Customs Tariff Act, 1975 (51 of 1975). (2) Notwithstanding anything contained in sub-rule (1), no credit of the specified duty paid on capital goods shall be allowed if such duty has been paid on such capital goods before the 1st day of March, 1994."
(3.) The Tribunal by the impugned judgment and order dated 13th April, 1999, considered various items which were involved in different appeals and by a common judgment and order decided the controversy in favour of the manufacturers rejecting the stand of the revenue that those are not 'Capital goods' within the meaning of Explanation (1)(a) defining 'Capital goods'. Some of the items considered by the Tribunal are : power cables and capacitors in case of Jawahar Mills Ltd., control panels, cables distribution boards, switches and starters and air compressors in the case of Indian Refrigeration Co. Ltd.; electric wires and cables in the case of Kothari Sugar and Vijay Chemicals. The Tribunal on consideration of the aforesaid provision and various decisions including some of this Court one of it being by a Bench of which one of us (Bharucha, J.) was a member (Indian Farmers Fertilisers Co-operative Ltd. vs. Collector of Central Excise, Ahmedabad, (1996) 5 SCC 488, came to the conclusion that the items involved qualify as 'Capital goods' under Rule 57-Q and would thus be eligible for Modavat Credit. The Tribunal did not accept the contention of the Revenue that the items were not 'Capital goods' within the meaning of term as defined in Explanation (1).;