Per V.P. Gulati: The issue in the appeal relates to grant of MODVAT Credit in terms of Rule 57 Q read with Rule 57 S in respect of Fork Lifts which have been held to be eligible by the learned lower authority by reason of use of the same in the respondents' factory, following the ratio of the judgment of the Hon'ble Supreme Court in the case of Collector of Central Excise Vs. Rajasthan Chemical Works reported in 1991 (55) ELT 444. The learned lower authority in this context has held as under:

"I have carefully gone through the records of the case including the submissions made in the grounds of appeal as well as during the hearing. As rightly contended by the appellants, the provision to Rule 57-S has been amended by Notn. 23/94-CE(NT) by which the concept of capital goods has been redefined to include machinery, machines etc. used in or in relation to the manufacture of final product. I observe that the above expression has a wider connotation than" the expression' used in production or to bring about any change in any substance in the manufacture of final product' and therefore as held by the Supreme Court fork lift being used in the transfer of raw material from one place to another can be regarded as taking a part in relation to the manufacture of final product, entitled to input credit."

2. The Revenue has urged as under in the grounds of appeal;

"Collector (Appeals) has observed that with effect from 20.5.1994, all capital goods used in or in relation to the manufacture of final products are covered by Rule 57 Q read with Rule 57S in view of amendment of Rule 57S by Notification No. 23/94CE(NT) dated 20.5.94. This observation is not correct as the said amendment relates only to Rule 57S and there has been no change with respect to scope of Modvat benefit under Rule 57 Q, nor has the definition of goods undergone any change under Rule 57 Q. It is evident from the definition of capital goods under Rule 57Q, in respect of capital goods used in relation to the manufacture of final products that only Moulds & Dies, Generating sets and weighbridges used in the factory of the manufacturer were specifically covered, prior to 16.3.95. It is only after the issue of Notification No.11/95-CE(NT), dated 16.3.95 that the scope of capital goods used in relation to manufacture of final products was widened. The issue of this Notification confirms the fact that not all the capital goods used in relation to the manufacture of the final products were covered by Rule 57 Q, but only these specifically covered under the definition were covered.

The goods involved in this case i.e. Forklift, have been used for transport of raw materials from one place to another place only. It is not used for the manufacture of final products. It is also not specifically covered under Rule 57Q. As such it cannot be considered to be used " in relation to the manufacture of final product"."

The learned SDR for the Department has reiterated the grounds of appeal and has pleaded that the ratio of the judgment of the Hon'ble Supreme Court is distinguishable and has held that Modvat Credit in respect of Fork Lift has to be considered only in the context of the definition of capital good as set out in Rule 57Q. This definition under Rule 57 Q is reproduced below for convenience of reference:

Explanation: - For the purposes for this section,-