Per J.H. Joglekar: This is an appeal and stay application filed by the Collector of Central Excise, Meerut.

2. When the matter was argued, it became clear that the main appeal itself could be decided at this stage. Both sides have no objection.

3. The issue involved in the appeal is whether the electrical overhead traveling (EOT) cranes is an admissible item of machinery for Modvat availment under Rule 57Q of the Central Excise Rules, 1944. The Assistant Collector held that this crane was used only for handling of the heavy machinery parts and their raw-materials. He observed that EOTs are specifically allowed with effect from 16.3.95 by virtue of Notification No. 11/95 dated 16.3.95 and, therefore, prior to this date they were not admissible. He further held that such cranes did not bring any change in any substance for the manufacture of final products. The Collector in his Order- in-appeal has observed that the cranes were used for moving heavy machinery parts from one place to other within the production hall of the plant. He observed that it was used extensively as an "appliance" for producing and processing of the final product. He thus held that the crane fell under clause 1 (a) of the explanation to the said Rule. The Revenue has come in appeal against this order.

4. Shri P. Das, Ld. SDR, urged that cranes were specifically included in the list of eligible machinery with effect from 16.3.95 and, therefore, it is clear that the benefit was not available prior to this date. He claimed that the cranes were used for shifting and handling of raw-material and finished goods inside the factory and thus did not get used in producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products. On this ground he urged that the cranes were not eligible machinery.

5. Shri L.P. Asthana, Ld. Advocate, stated that the respondents were manufacturers of heavy machinery for sugar plants. Citing from the Order-in-appeal he stated that crane was used for moving parts of the machinery for final manufacture and thus was used directly in the production of the final products.

6. I have carefully considered the submissions made by both sides.

7. It is correct that cranes falling under heading 84.26 were specifically brought under the purview of the definition of machinery under Rule 57Q with effect from 16.3.95. But it would not be correct to say that its admissibility prior to this date did not exist. If such cranes performed functions narrated in the definition of capital goods in 'the said Rule even prior to its amendment then the entitlement cannot be taken away merely because the machinery was not referred to by specific nomenclature. The eligibility clause says that such machinery should be used for producing or processing any goods. The Commissioner (Appeals) had observed that the subject cranes were used for moving parts of machinery inside the production hall of the plant. Heavy machinery is manufactured in parts in various locations and then the complete machinery is put together at a particular location. If the parts made at various locations cannot be brought together then there would be no production of final goods. A crane which i s used for bringing together van ous parts for assembly can definitely be termed to be used in the production or processing of the final goods. The situation would be different if such cranes were to be used outside the manufacturing area, say for moving of fully finished goods from the bonded store rooms to the loading platform.

Therefore, in each case the location as well as the utilisation of each machinery has to be examined to determinist admissibility under the impugned rules., Several plants have conveyor belts for moving the in process material from one section to another. Good examples are sugar factories and cement factories. But for the movement by the conveyor belts there would be no production or processing of final goods. These are Permi