Moheb Ali M., Member (T)
1. This is a Revenues appeal against the order of the Commissioner (Appeals).
2. The respondent is engaged in the manufacture of goods falling under Chapter 29 of CETA. He has taken modvat credit of Rs. 8,81,125/- on capital goods received in his factory during the month of May 1995. The goods involved are plates, refrigeration compressors, angles, bars, joints and channels etc. The credit was denied and penalty of Rs. 25,000/- was imposed by the lower authority. In appeal, the Commissioner set aside the lower authority's order. Hence the appeal by the Revenue.
3. The Commissioner (Appeals) referred to the Hon'ble Supreme Court's decision in the case of Jawahar Mills and applied the ratio. The Apex Court observed thus "The aforesaid definition of 'Capital Goods' is very wide. Capital Goods can be machines, machinery, plant, equipment, apparatus, tools or appliances. Any of these goods if used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final product would be 'Capital Goods', and, therefore, qualify for availing Modvat Credit. Per Clause (b), the components, spare parts and accessories of the goods mentioned in Clause (a) used for the purposes enumerated therein would also be 'Capital Goods' and qualify for Modvat Credit entitlement. Clause (c) makes moulds and dies, generating sets and weight bridges used in the factory of the manufacturers as capital goods and thus quality for availing Modvat Credit. The goods enumerated in Clause (c) need not be used for producing the final product or used in the process of any goods for the manufacture of the final product or used for bringing about any change in any substance for the manufacture of the final product and the only requirement is that the same should be used in the factory of the manufacturer. Thus it can be seen that the language used in the explanation is very liberal".
4. The Revenue contends that the reliance on the judgment is not correct to the extent that for any goods to qualify for availment of modvat credit they should be used for producing or processing of any goods or for bringing about any change in substance. The further contention is that modvat availability for each of the disputed goods has to be examined in respect to the use of such goods for the manufacture of final product. Modvat credit on structural materials is not applicable as per several judgments of the Tribunal. It is also contended that the assessee himself while replying to the show cause notice agreed that he is not entitled to credit on MS Plate channels etc., It is also argued that the commissioners appeal erred in stating that the original authority confirmed more duty than what is stated in the show cause notice.
5. None appeared for the respondents. Heard the learned DR and perused the records.
6. I observe that the Apex Court's decision on what constitutes capital goods enunciated in Jawahar Mills case is applicable to the facts of this case. The Apex Court clearly indicated that the capital goods need not necessarily be used for producing a final product or used in the process of any goods for the manufacture of final product or used by bringing about any change in any substance. The Revenue's contention that the Commissioner has wrongly followed the ratio of the decision sited supra is rejected.
6. The appeal is rejected.
(Operative part pronounced in court)