BALIA, J. - (1.) HEARD learned counsel for the parties.
(2.) THIS appeal is directed against the order of learned Customs, Excise and Gold (Control) Appellant Tribunal, New Delhi dt. 4. 7. 2003. The question of law raised in this appeal is as under:- "whether the modvat credit was admissible or not on the items used in workshop meant for repairing the machine or machinery which was used for manufacture of final product namely cement. " The controversy is confined to claim of respondent-assessee to modvat credit on drilling machines, welding machines and lubricants used by the respondent-assessee in workshop for general maintenance purpose of plant and machinery used in manufacture of cement. The claim of the assessee to avail modvat credit of Excise Duty paid on such drilling machines, welding machines and lubricants was denied by the Revenue inter alia on the ground that these machines used in workshop are not used in producing or processing of the final product. The claim of the assessee to avail modvat credit relates to the period ending prior to July 1996 under Rule 57 Q of the Central Excise Rules, 1944 as it stood at the relevant time. The Tribunal relying on its earlier decision in Jawahar Mills Limited vs. CCE, Coimbatore, 1999 (108) ELT 47 (T) in which the Tribunal has held that modvat credit in respect of control panel, cable, welding electrodes, etc. is allowable, accepted the contention of the assessee that articles in question are used in the factory of the assessee and is essential part for up-keeping and better functioning of the machines, therefore, they are eligible for modvat credit as capital goods within the meaning of Rule 57q. The contentions raised before us are on the same lines. It would be apposite here to reproduce Rule 57 Q to focus on the controversy in its fullness:- Rule 57q. 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 utilising the credit so allowed towards payment of duty of excise leviable on the final products, or as the case may be, on such capital goods, if such capital goods have been permitted to be cleared under Rule 573, subject to the provisions of this Section and the conditions and restrictions as the 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 [or by a unit in Software Technology Parks] 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 purpose 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. [ (d) following goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and used in the factory of manufacturer- (i) All gods falling under heading Nos. 84. 02, 84. 05, 84. 06, 84. 11, 84. 12, 84. 16, 84. 17, 84. 19, 84. 21, 84. 21, 84. 25 to 84. 28, 84. 80, 85. 05, 85. 35, 90. 11, 90. 12, 90. 16, 90. 17 and 90. 24 to 90. 31, (ii) auxiliary plants falling under heading No. 84. 04 for use with boilers of heading No. 84. 02; (iii) I. C. Engines (other than engines of motor vehicle) falling under heading No. 84. 07 or 84. 08; (iv) compressors (other than of a kind used for refrigerating and air conditioning applications) falling under heading No. 84. 14; (v) electric `generating sets (of output exceeding 75 KVA) falling under heading No. 85. 02; (vi) transformer (of power handing capacity exceeding 75 KVA) falling under heading No. 85. 04; (vii) Goods (other than for medical use) of heading No. 90. 22; (viii) Goods (other than of a kind used for refrigerating and air conditions application) falling under heading Nos. 84. 81 and 90. 32; (ix) components, spares and accessories of the goods specified against item (i) to (viii) above; (x) refractories falling within Chapter 69; (e) goods specified in the Table in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 68/89- Customs, dated the 1. 03. 1989, and used in the factory of manufacturer' (2) "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 (other than those capital goods in respect of which credit of duty was allowable under any other rule or notification prior to the 16th day of March, 1995) shall be allowed if such capital goods were received in the factory before the 16th day of March, 1995].
(3.) APPARENTLY, emphasis of the appellant is on clause (a) of Sub-section (1) of Explanation appended to Rule 57q, which defines `capital goods', which provides for modvat credit on `duty paid capital goods used in manufacture of specified goods', whereas the focus of contention raised by the learned counsel for the respondents is that wider scope of capital goods appearing from enumeration of various goods included in clauses (a), (b), (c) and (e) of the definition of capital goods contained in Rule 57 A which includes not only machines directly involved or used for producing or processing any goods or for brining about any change in any substance for the manufacture of final products, but eligibility of modvat credit extends to components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose, and moulds and dies, generating sets and weigh-bridges used in the factory of the manufacturer. The different heads of the Central Excise Tariff Act, 1985 enumerated in sub-clause (b) and (d) of clause (1) of Explanation of which we note that for availing modvat credit the direct use of those articles used for producing or processing any goods or for brining about any chance in any substance for the manufacture of final products is not essential. In fact, the contentions of the revenue is that since drilling machines, welding machines and lubricants are not used for producing or processing any goods or for brining about any chance in any substance for the manufacture of final products, they are not eligible for modvat credit as capital goods, notwithstanding the admitted case that indirectly the articles in question are being used in the factory for manufacture and are essential for up-keeping and maintenance of those machines which are directly involved or used for producing or processing any goods or for brining about any chance in any substance for the manufacture of final products. The perusal of Rule 57q as a whole leaves no room of doubt in our mind that in all circumstances, direct involvement with producing or processing any goods or for brining about any change in any substance for the manufacture of final products with the machines, machinery, plant, equipment, apparatus, tools or appliances are not essential condition, if it falls in any of the clauses (b), (c) and (d) the essential condition of direct involvement of the capital goods in the manufacture in process is not to be seen. ;