Commissioner of Customs and Central Excise vs Bazpur Co-Operative Sugar Factory

Barin Ghosh, C.J.—Asbestos packing and graphite packing were purchased by the assessee upon payment of excise duty. The assessee filed a claim under rule 57Q of the erstwhile Central Excise Rules, 1944 claiming Modvat credit to the extent of duty, thus paid, on capital goods. Asbestos packing and graphite packing are used to seal the leakage in the pipes carrying liquid from one equipment to another in order to prevent loss of such liquid. There is no dispute, however, that asbestos packing and graphite packing were used in the equipments, of the assessee, which were part of its plant and machinery. Having regard to the nature of its needy use of asbestos packing and graphite packing is recurring. In other words, the same is required to be procured on and of. In the case of 1998 (98) ELT 166 , a smaller Bench of the Tribunal decided that having regard to the nature of use of asbestos packing and graphite packing, the same cannot be treated as capital goods. Having again considered the use of asbestos packing and graphite packing, a larger Bench of the Tribunal in the case of CCE v. Modi Sugar Ltd. reported in [2000] 38 RLT 718 [LB], according to us, correctly held that the same were capital goods, inasmuch as, in order to be a capital goods, the duration of the life span of the goods is not important; what is important is whether the goods help in production or not, If the same helps only production, but does not become part of the inventory of the produce, the same should be treated as capital goods. We, accordingly, find no reason to interfere. The reference fails and the same is dismissed.