LexM/S. JAYASWAL NECO LTD. versus COMMNR. OF CENTRAL EXCISE, RAIPUR
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[2015]4 S.C.R. 313 MIS. JAYASWAL NECO LTD. v. COMMNR. OF CENTRAL EXCISE, RAIPUR (Civil Appeal No. 8554 of 2003) MARCH 13, 2015 [A.K. SIKRI AND R. F. NARIMAN, JJ.] A B Central Excise Rules, 1944: Rule 57Q - Modvat credit C on capital goods - Railway track material used for handling raw materials and processed goods - Whether can be treated as capital goods uls. 57Q - Held: The use of railway tracks is related to the actual production of goods 0 and without the use of the said railway track, commercial production would be inexpedient - Assessee entitled to modvat credit. Allowing the appeal HELD: 1. A bare reading of rule 57Q of Central Excise Rules shows that for the purpose of allowing credit on specified duty paid on the capital goods, such capital goods are to be used by the manufacturer E in his factory and are to be utilised for the purpose of F manufacturing of final product. When machines, machinery, plants, equipment, etc., are used for producing or processing any good or bringing about any change !n any substance for the manufacture of final product, it would qualify as 'capital goods' and G MODVAT credit thereon would be permissible. Where any particular process is so integrally connected with 313 H 314 SUPREME COURT REPORTS [2015) 4 S.C.R. A the ultimate production of goods that but for that process, manufacture or processing of goods would · be impossible or commercially inexpedient, goods required in that process would fall within the expression "in the manufacture of goods". In the B instant case, the manner in which railway track materials were used by the appellant was explained by the appellant before the Commissioner and veracity thereof was accepted by the Commissioner. The railway tracks used in transporting hot metal in ladle C placed on ladle car from blast furnace to pig casting machine through ladle car where hot metal is poured into pig casting machine for manufacture of pig iron. Secondly the system also helps in taking hot pigs from 0 pig casting machine to pigs storage yard by the big wagon where hot pig iron are dumped for cooling and making ready for dispatchers. This Railway tracks are also used in handling of raw materials at wagon tippler to stacker reclaimer where stacking and reclaiming of E raw material is taken place and required quantity is conveyed for further processing at stock house. It reflects that the appellant has installed railway tracks within the plant which is a handling system for raw material and processed material. [Paras 5 to 7, 13 to F 14] [318-D,E,G-H; 319-B,C; 322-H; 323-A-E] G Mis. J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. Sa/es Tax Officer, Kanpur and Anr. (1965) 1 SCR 900 - relied on. Case Law Reference (1965) 1 SCR 900 relied on. Para 7 CIVIL APPELLATE JURISDICTION: Civil Appeal No. H 8554 of 2003. JAYASWAL NECO LTD. v. COMMNR. OF CENTRAL 315 EXCISE, RAIPUR From the Judgment and Order dated 30.04.2003 of the A Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. E/303/2002-NB. V. Lakshmikumaran, M. P. Devanath, R. Ramachandran, Ms. L. Charanaya, Aditya Bhattacharya, Prashanth S. B Shivadass, Vivek Sharma, Advs., for the Appellant. K. Radhakrishnan, Sr. Adv., Sanjai Kumar Pathak, T. C. Sharma, Ms. S. Manchanda, B. Krishna Prasad, Advs., with himfor the Respondent. c The Judgment of the Court was delivered by A. K. SIKRI, J.1. This appeal arises out of the judgment/ final order dated 30.04.2003 passed by Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi D (hereinafter referred to as 'CEGAT') whereby the Tribunal has dismissed the appeal of the appellant thereby confirming the order of the Commissioner insofar as it denies the appellant MODVAT credit on some of the capital goods and E parts which were detailed in the show cause notice issued under Rule 57Q of the Central Excise Rules, 1944 (hereinafter referred to as 'Rules'). 2. The dispute has arisen in the following factual background. F The appellant is engaged in the manufacture of pig iron falling under Chapter 72 of the Schedule to Central Excise Tariff Act, 1985. The appellant is availing MODVAT credit on various capital goods and parts thereof under Rule G 57Q of the Rules. The respondent-authority had issued two show cause notices thereby proposing to deny the appellant the MODVAT credit availed by them under Rule 57Q on the following items: - H 3
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