Final Order No. A/787/98-NB arising from in Appeal No. E/1817/97-NB. Case: Collector of Central Excise, Meerut Vs Star Paper Ltd.. Central Information Commission

Case NumberFinal Order No. A/787/98-NB arising from in Appeal No. E/1817/97-NB
CounselFor Appellant: Shri T.A. Arunachalam, JDR and For Respondents: Shri R. Swaminathan, Consultant.
JudgesShri P.C. Jain, Member (T)
IssueCentral Excise Rules, 1994 - Rule 57D(2)
Judgement DateJuly 20, 1998
CourtCentral Information Commission


(New Delhi)

  1. Heard both sides. The issue involved herein is whether the benefit of Modvat credit on welding electrodes used in manufacture of the capital goods inside the factory is permissible under Rule 57D(2) or not. The respondents herein had made a declaration for the said goods under Rule 57G declaring the aforesaid purpose of the inputs.

  2. A show cause notice was, however, issued on 3-4-1996 that the Modvat credit on the inputs under Rule 57A was not permissible inasmuch as it is not used in relation to paper but it is used in fabrication of recausticising plant.

    3.1 On adjudication, the original authority denied the Modvat holding as follows:-

    "(2) Credit taken on welding electrode:- As submitted by the assessee in their written reply of show cause notice welding electrodes has been used for electric welding in fabrication of recausticising plant. As per case of M/s. Quality Steel Tubes (P) Ltd. v. Collector - 1995 (75) ELT 17 (SC). The recaustisising plant is not goods as the same is embedded to earth and not marketable. Hence recausticising plant is not dutiable product."

    3.2 On appeal before the lower appellate authority, the respondents herein succeeded which has held that the welding electrodes are used in manufacture of the goods as well as manufacture of plant and machine. Hence this appeal by the Revenue.

  3. Learned JDR, Shri T.A. Arunachalam submits that welding electrodes cannot be said to have been used in or in relation to manufacture of final product i.e. paper manufactured by the respondents. Revenue has stated that the respondents have used welding electrodes for recausticising plant. The recausticising plant is not goods as the same is embedded to earth and not marketable, in view of Apex Court judgment in the case of M/s. Quality Steel Tubes (P) Ltd. v. Collector [1995 (75) ELT 17 (SC)]. The aforesaid ground has been reiterated by the learned JDR, Shri T.A. Arunachalam.

  4. Opposing the contention, learned consultant, Shri R. Swamynathan submits that the aforesaid view of the Revenue would mean the provisions of Rule 57D(2) are superfluous inasmuch as Rule 57D(2) states "credit of specified duty allowed in respect of any inputs shall not be denied or varied on the ground that...... such inputs are used in the manufacture of capital goods as defined in Rule 57Q...... or capital goods for the time being exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty". He...

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