- (1.) We have heard Sri Shubham Agarwal for the appellant. Sri R.C. Shukla appears for the respondents.
(2.) This Central Excise Appeal under Section 35-G of the Central Excise Act is directed against the order of the Customs Excise Service Tax Appellate Tribunal, New Delhi dated 28.01.2004. The appellant has raised substantial questions of law to be considered by the Court, which are summarized in question Nos. 1 and 2 as follows:- "1. Whether the Tribunal was justified in confirming the order regarding dis-allowance of Modvat-credit on HR/MS/GC sheets plates/angles/channels/supporting structure etc when the use of the same was specifically given at the time of adjudication proceedings and the same has been reproduced in the order of the Asstt. Commissioner of Central Excise? 2. Whether the Tribunal was justified in holding that HR/MS/GC sheets plates/angles/ channels/ supporting structure etc are not part and accessories of the capital goods installed in the factory. When even the Asstt. Commissioner of Central Excise admitted that these goods are used in the machine?"
(3.) The appellant-assessee claimed Modvat-credit on the HR/MS/GC sheets/ plates/angles/ channels/supporting structure etc., used mainly in boiler/centrifugal machine/crystaliser/juice heater as an accessory/components of these machines, for making shades and fabrication of various items including staging/supporting structure and repair of the plants of the machinery including replacement of worn out parts. The Adjudicating Officer did not allow the Modvat-credit on these goods. The Appellate Authority confirmed the order of the Adjudicating Officer on the ground as follows:- "The appellant has intimated that HR/MS/GC sheets/plates/angles/channels/supporting structure etc., are used mainly in boiler/centrifugal machine/crystaliser/juice heater as an accessory/components of these machines, for making shades, fabrication of various items including staging/supporting structure and repair of the plants of the machinery including replacement of worn out parts. The appellant has not mentioned the specific role of these capital goods in their factory. Rather, their submission is contradictory in itself as they have mentioned that these are used as component/accessory of the machines as well as raw material for shades/staging structures and thus it is observed that they have given its usage with the intention to avail the benefit of modvat. The appellant has not specified the particular use of these goods, which is required to determine the eligibility as capital goods. Even the role of the particular lot in question should be given as these goods have multifarious application. The Hon'be Tribunal in the case of Rosa Sugar Works Vs. CCE Kanpur,1999 114 ELT 950 has held "The appellants have not placed any corroborative evidence on record regarding the precise use of these item. Fabrication/construction materials have been held by the Tribunal as not being covered by the definition of capital goods under Rule 57 Q. Items used for repairing damaged parts of already manufactured capital goods are also not covered by the definition of capital goods". There is a clear cut distinction between the raw material of capital goods and parts/components thereof e.g. Steel is the raw material of bus being the constituent of its body but it is not the parts/components thereof. The piston, gear box, break shoes etc are the component/parts of he bus but these are not the raw material of bus. Component/parts is a complete goods in itself and ready to use without requiring any further processing. Considering the nature and general application of the disputed items, it is observed that these cannot be used as such as a components/parts. As such these can be a raw material of the capital goods but not the components/spares thereof. In terms of Rule 57 Q, a component, parts, spares of the machine, plant are the eligible capital goods but not the raw material of the capital goods. The Hon'ble Tribunal in the case of Ganga Kisan Sahakari Chini Mills Ltd Vs. CCE Meerut,1998 103 ELT 638 has held that Steel Sheets used in the manufacture of molasses tank are inputs of molasses tank and not its parts, spares or plant and equipment - credit not available under Rule 57 Q of Central Excise Rules 1944. Accordingly, it is observed that the adjudicating authority has correctly denied the Modvat-Credit on these goods on the ground that party's contention is misconceived as by no stretch of imagination these cannot be treated as component/accessory.";