R. Jayaraman, Member (T) - (1.) FOR the reasons stated in the petition, the petition is allowed and thereafter, with the consent of both the parties, the appeal is taken up for disposal on merits. The issue based in the appeal relates to eligibility to MODVAT Credit in respect of regulators for the ceiling fan, which was claimed as an input used in or in relation to the manufacture of electric ceiling fan. The Assistant Collector disallowed the benefit of MODVAT Credit and the said order was confirmed vide Order -in -Appeal No. 120/90 (H) C.E., dated 31 -8 -1990 following the decision of the South Regional Bench vide Order No. 891/1987, dated 17 -12 -1987 in the case of Jay Engineering Works v. CCE, Hyderabad, wherein it has been held that regulators cannot be construed to be used in or in relation to the manufacture of ceiling fan and hence MODVAT Credit is not admissible. We find that there is no dispute that Ceiling fans cleared from the factory gate are only with regulators and the fans cannot be marketed without regulators, though the fan can function without regulator. The Andhra Pradesh High Court in the case of Jay Engineering Works v. UOI reported in 1982 (10) E.L.T. 378 (AP) have held that regulators are indispensable parts of ceiling fans. Though this decision is rendered in regard to classification of regulators, this decision' goes to indicate that regulators are indispensable parts of ceiling fan. and in that sense it could be construed to be a component. We also find that the Central Board vide letter F. No. 150/4/87 -CX, dated 24 -6 -1987 have clarified that regulators would be classifiable under Heading 8414.20 along with fans. This also goes to indicate that such regulators are classifiable along with fans as part of fan. The Supreme Court in the case of C.C.E. v. Jay Engineering Works Lid. reported in 1989 (39) E.L.T. 169 (SC) have held in the context of erstwhile Notification 201 /89 that name plate affixed to the fan should be construed to be a component irrespective of the fact that the fans are already manufactured and fully assembled and can function without affixing the name plate as the fans do not become marketable without the name plate affixed on the fans. The same principle is adopted by the Supreme Court in the case of Eastend Paper Industries reported in 1989 (43) E.L.T. 201 (SC). Following these decisions we are to hold that regulators, though externally fitted, are indispensable parts of the ceiling fan irrespective of fan can function without regulator. Fans cannot be [marketed] without regulator at the factory gate.
(2.) BEFORE parting with this order we would like to observe that in the case of engineering goods, it is not always the position that the components go in to the final product for its operation. In the case of table fans, the regulator is fitted to the fan itself whereas in the case of ceiling fan, regulator is fitted externally. This does not mean that regulator fitted in table fan is eligible for MODVAT Credit while regulator for ceiling fan is not eligible for the same benefit. What has to be seen is whether regulator is an indispensable part of the fan and whether fan can be marketed without regulator. In view of above, we allow the appeal.;