Per Jyoti Balasundaram :

The above appeals have been referred to this Larger Bench vide separate reference orders. In all the cases, the issue involved is eligibility or otherwise to the benefit of Modvat credit in terms of Rule 57Q of the Central Excise Rules.

2. The stand of the revenue is that the items in dispute namely welding electrodes, wires and cables etc. are not capital goods within the meaning of the explanation to Rule 57Q which covers goods used only in production, processing or bringing about any change in substance for manufacture of the final product and that the goods in question are not such goods. The Revenue is also of the view that the amendment in Rule 57Q which was made on 16.3.1995 is prospective and not retrospective in operation.

3. In the case of Jawahar Mills Ltd.[reported in 1998 (26) RLT 312 (T)], Modvat credit has been denied on power cables and capacitors; the period of dispute is March 1994 to October 1994. This case has been referred to the Larger Bench by Misc. Order No. 52/98, dated 27.1.1998 [1998 (100) ELT 41 (Tribunal)], in view of the conflicting views expressed in the Tribunal's order - Modvat credit had been extended on wires and cables in the cases of Century Cement Ltd. Vs. Collector of Central Excise - 1998 (24) RLT 75 (T) = 1997 (95) ELT 655, Grasim Cement Vs. Collector of Central Excise - 1997 (96) ELT 354 and other cases while in the case of SIV Industries by Final Order No. 646/96 dated 16.4.1996, the Tribunal had held that wires and cables used for transmission of electricity would not be eligible to the benefit of Modvat credit as they are not eligible to capital goods in terms of Rule 57Q.

4. In the case of Indian Refrigeration Company Ltd. the items are control panels, cables, distribution boards, switches and starters and air compressors and the issue of eligibility to Modvat credit has been referred to the Larger Bench vide Mis. Order No. 54/98, dated 29.1.1998.

5. In the case of Kothari Sugar and Vijay Chemicals, the issue of eligibility to credit on electric wires and cables has been referred to the Larger Bench vide Misc. Order no. 55/98, dated 21.9.1998.

In the case of Modi Tyre Factory, the issue relating to the eligibility of credit under Rule 57Q on welding electrodes, parts of weighing machines, potential transformers and dust filter parts has been referred to the Larger Bench vide Bench Order dated 17.4.1998.

The issue of eligibility to credit on control panels has been referred vide Bench Order dated 18.5.1998 in the case of Prayag Polytech Ltd..

Electric wires and cables are subject matter of appeal filed by M/s DLF Cement Ltd. and refers to Bench Order 29.4.1998.

6. We have considered the rival submissions, perused the records and case laws cited before us and record our findings herein below:

Rule 57Q of Central Excise Rules, 1944 as introduced by Notification No. 4/94-CE dated 1.3.1994 reads as under:

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 an 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 57S 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 -