Per G.R. Sharma :

The short issue for determination in this appeal is whether Modvat credit can be utilised before the use of capital goods in the installed plant. The facts leading to the present appeal are that the appellants are engaged in the manufacture of Graphite Electrodes. They procured materials for expansion and modernisation of their plant which was already existing for manufacture of Graphite Electrodes right from 1977. The department alleged that some of the inputs which they are claiming to be capital goods, were not capital goods. The second allegation was that the credit was taken before the new furnace actually started operating. On the first issue, the Ld. Commissioner (Appeals) decided the case in favour of the assessee holding that those items were capital goods. Therefore, the only issue agitated before us was whether Modvat credit could be utilised before operating of the furnace in which these goods were used.

2. Shri S.N. Kohli, ld. Advocate appearing for the appellants submits that this issue is already decided by the Tribunal in favour of the assessee under Tribunal's order in the case of Pudumjee Pulp & Paper Mills Ltd. Vs. Commissioner of Central Excise, Pune as reported in 1996 (87) ELT. 557 and further by another decision of the Tribunal in the case of Hind Spinners Industries Growth Centre Vs. Commissioner of Central Excise, Indore as reported in 1997 (23) RLT 403 = 1997 (96) ELT. 651. Ld. Counsel submits that since the issue is already decided by two independent orders of this Tribunal, therefore, the appeal may be allowed. Ld. Counsel also submits that ld. Commissioner relied upon his earlier order which has already been set aside.

3. Shri D.K. Nayyar, ld. DR reiterates the findings of the lower authorities.

4. Heard the submissions made by both the sides. As indicated earlier, the appeal is on a very short issue i.e. whether Modvat credit taken can be utilised for paying duty on the final product when the material on which Modvat credit was taken was actually used in the furnace which was installed in Nov'95. In the instance case, Modvat credit was taken and utilised from Aug'94 to Oct'95 involving a credit of duty amounting to Rs. 1,17,54,047/-. The department was of the view that since the furnace in which the capital goods were used was installed and started operation in Nov'95, therefore, in terms of Rule 57Q credit could be utilised only on or after the date of operation of the new furnace. In the instance case, we also note that the appellants was already manufacturing Graphite Electrodes right from 1977. We note that Tribunal in coming to the conclusion in the case of Hind Spinners Industries Growth Centre relied upon the clarification given by the Central Board of Excise & Customs in their circular No. 277/iii/96-CX dt. 2.12.96 in which the Board clarified the position and on the basis of this circular, the Tribunal in this case came to the conclusion that Modvat credit could be utilised right from the date of receipt of the inputs in the factory if the factory was already a running one. Following the ratio of the judgements in the above two cases and also relying on the clarification given by the Board, we hold that the appellants rightly utilised Modvat credit from the date of receipt of the goods and taking credit thereon.

5. In the circumstances, the appeal is allowed. Consequential relief, if any, shall be admissible to the appellants in accordance with law.