JUDGMENT 1. Heard Sri S.K. Upadhyaya, learned counsel for appellant. 2. The substantial questions of law on which this appeal was admitted are : (i) Whether, on the facts and circumstances of the case was the Tribunal legally correct in holding that issue of welding electrodes used in maintenance of machine and machinery in the factory used, this issue already stand settled against the appellant in case of Japee Rewa Plant Vs. CCE Raipur reported in 2003 (57) RLT 739? (ii) Whether the appellate Tribunal on the facts and circumstances of the case and the materials on records justified in law in disallowing the canvet credit to the appellants and disposed off the appeal without entering deeply and lawfully in question of present case? 3. Before, learned counsel for appellants commenced arguments, to make things more clear we have formulated one more substantial question of law : (iii) Whether 'welding electrodes' can be treated to be eligible 'inputs' under Rule 57A/B or 'capital goods' under Rule 57Q, to claim MODVAT credit? 4. Dispute relates to period April, 1999. Appellant-assessee M/s Kisan Sahkari Chini Mills Ltd. is engaged in manufacture of 'sugar' and 'molasses'. The finished products for the purpose of Excise Duty, fall in Chapter 17, heading 17.01 and 17.03 of Central Excise Tariff Act, 1985 (hereinafter referred to as 'CET Act, 1985'). For the month April, 1999, assessee availed MODVAT credit of Rs.26166/- on 'Welding Electrodes', claiming that it comes within the term 'input', used in or in relation to manufacture of final products and therefore is entitled for MODVAT credit under Rule 57A of Central Excise Rules, 1944 (hereinafter referred to as 'Rules, 1944'). 5. A show cause notice dated 26th July, 1999, was issued to appellant to show cause why MODVAT credit of Rs. 26,166.70/-, wrongly availed be not disallowed and recovered, since 'Welding Electrodes' are not 'inputs' within relevant Rules. Assessee submitted reply stating that 'Welding Electrodes' are used in repair/maintenance of plant and machinery installed in the factory, used in manufacture of sugar, therefore, entitled for MODVAT credit under Rule 57A of Rules, 1944. He also placed reliance on judgment of Tribunal, New Delhi in M/s H.V.R. Alloys Steels Ltd. Vs. C.C.E. [ 1998 (103) ELT 132 ]. 6. Assessee submitted reply stating that 'Welding Electrodes' are used in repair/maintenance of plant and machinery installed in the factory, used in manufacture of sugar, therefore, entitled for MODVAT credit under Rule 57A of Rules, 1944. He also placed reliance on judgment of Tribunal, New Delhi in M/s H.V.R. Alloys Steels Ltd. Vs. C.C.E. [ 1998 (103) ELT 132 ]. 6. Deputy Commissioner of Central Excise, Saharanpur being satisfied with the reply and submissions advanced by assessee, allowed MODVAT credit and dropped show cause notice dated 26.07.1999, vide order dated 03.04.2002. Thereagainst, Revenue preferred appeal being Appeal No. 348-CE/MRT-I 2003, before Commissioner (Appeals), Custom and Central Excise, Meerut (hereinafter referred to as 'Commissioner (A)'). Appeal was allowed vide order dated 23.12.2003 and Commissioner (A) held that 'Welding Electrode' is neither 'input' nor 'capital good', so as to entitle Assessee, MODVAT Credit and for the said purpose, it relied on judgment of Tribunal in J.P. Rewa Plant Vs. CCE Raipur [ 2003 (159) ELT 553 ]. 7. Assessee preferred further appeal before Customs, Excise and Service Tax Appellate Tribunal, New Delhi (hereinafter referred to as 'CESTAT'), which has been dismissed vide order dated 31.08.2006. Tribunal has further placed reliance on a larger Bench decision in Triveni Engineering and Industries Ltd. Vs. Commissioner of Central Excise [ 2005 (186) ELT 158 ]. 8. In view of above, single question which would answer all the three questions formulated above would be Whether "Welding Electrodes" can be treated to be 'input' or 'capital goods' so as to entitle the appellant assessee benefit of MODVAT credit? 9. Let us examine scheme of relevant Rules in this respect, applicable for MODVAT credit. 10. The scheme of MODVAT (Modified Value Added Tax) came to be introduced in India w.e.f. 01.03.1986. Section 37 of Act, 1944 was modified and Clause (xiva) was inserted by Section 51 Act 23 of 1986 w.e.f. 1st March, 1986 and Clause (xvib) was inserted by Section 96 of Act 11 of 1987 w.e.f. 12th May, 1987. These clauses read as under : "(xvia) provide for the credit of duty paid or deemed to have been paid on the goods used in, or in relation to, the manufacture of excisable goods; (xvib) provide for the giving of credit of sums of money with respect to raw materials used in the manufacture of excisable goods;" 11. These clauses read as under : "(xvia) provide for the credit of duty paid or deemed to have been paid on the goods used in, or in relation to, the manufacture of excisable goods; (xvib) provide for the giving of credit of sums of money with respect to raw materials used in the manufacture of excisable goods;" 11. The scheme was introduced by inserting Chapter AA containing Rules 57A to 57J. Initially MODVAT scheme was introduced with a view to avail credit on duty paid on excisable goods used as 'input' in manufacture of final products. From 1st March, 1987, similar scheme for allowing credit of money in respect of certain raw materials used in manufacture of certain excisable goods was introduced and Chapter AAA having Rules 57K to 57P was inserted. Scheme was further enlarged by inserting Chapter AAAA with Rules 57Q to 57U w.e.f. 01.03.1994 so as to permit availment of credit on duty paid on 'capital goods' which are used in manufacturing process. 12. All these three Chapters i.e. AA, AAA and AAAA were substituted by notification no. 6/97/C.E.(N.T.), dated 01.03.1997. 13. Rules 57A, 57B and 57Q, as came to be inserted by notification dated 01.03.1997 and amended up to February, 1999, read as under : "Rule 57A. Applicability. - (1) The provisions of this section shall apply to such finished excisable goods (hereafter, in this section, referred to as the final products) as the Central Government may, by notification in the Official Gazette, specifically in this behalf for the purpose of allowing credit of any duty of excise or the additional duty nder section 3 of the Customs Tariff Act, 1975 (51 of 1975), as may be specified in the said notification (hereafter, in this section, referred to as the specified duty) paid on the goods used in the manufacture of the said final products (hereafter, in this section, referred to as the inputs). (2) The credit of specified duty allowed under sub-rule (1) shall be utilised towards payment of duty of excise leviable on the final products, whether under the Act or under any other Act, as may be specified in the notification issued under sub-rule (1) and subject to the provisions of this section and the conditions and restrictions, if any, specified in the said notification. (3) The Central Government may also specify in the said notification the goods or classes of goods in respect of which the credit of specified duty may be restricted. (4) The credit of specified duty under this section shall be allowed on inputs used in the manufacture of final products as well as on inputs used in or in relation to the manufacture of the final products whether directly or indirectly and whether contained in the final product or not. (5) Notwithstanding anything contained in sub-rule (1), the Central Government may, by notification in the Official Gazette declare the inputs on which declared duties of excise or additional duty (hereinafter referred to as declared duty) paid shall be deemed to have been paid at such rate or equivalent to such amount as may be specified in the said notification and allow the credit of such declared duty deemed to have been paid in such manner and subject to such conditions as may be specified in the said notification even if the declared inputs are not used directly by the manufacturer of final products declared in the said notification, but are contained in the said final products. Explanation. - For the purposes of the sub-rule, it is clarified that even if the declared inputs are used directly by a manufacturer of final products, the credit of the declared duty shall, notwithstanding the actual amount of duty paid on such declared inputs, be deemed to be equivalent to the amount specified in the said notification and the credit of the declared duty shall be allowed to such manufacturer. [(6) Notwithstanding anything contained in sub-rule (1), the Central Government may, by notification in the Official Gazette, declare the inputs on which the duty of excise paid under section 3A of the Central Excise Act, 1944 (1 of 1944), shall be deemed to have been paid at such rate or equivalent to such amount as may be specified in the said notification, and allow the credit of such duty in respect of the said inputs at such rate or such amount and subject to such conditions as may be specified in the said notification : Provided that the manufacturer shall take all reasonable steps to ensure that the inputs acquired by him are goods on which the appropriate duty of excise as indicated in the documents accompanying the goods, has been paid under section 3A of the Central Excise Act, 1944 (1 of 1944).] RULE 57B. Eligibility of credit of duty on certain [inputs]. - (1) Notwithstanding anything contained in rule 57A, the manufacturer of final products shall be allowed to take credit of the specified duty paid on the following inputs, used in or in relation to the manufacture of the final products, whether directly or indirectly and whether contained in the final products or not, namely : - (i) inputs which are manufactured and used within the factory of production; (ii) paints; (iii) inputs used as fuel; (iv) inputs used for generation of electricity or steam, used for manufacture of final products or for any other purpose, within the factory of production; (v) packing materials and materials from which such packing materials are made provided the cost of such packing materials is included in the value of the final product; (vi) accessories of the final product cleared alongwith such final product, the value of which is included in the assessable value of the final product: [Explanation. - For the purposes of this sub-rule, it is hereby clarified that the term 'inputs' refers only to such inputs as may be specified in a notification issued under rule 57A.] (2) The manufacturer of the final products shall not be allowed to take credit of the duty paid on the following goods, namely : - (i) machines, machinery, equipment, apparatus, tools, appliances or capital goods as defined in rule 57Q (other than those used as component parts in the manufacture of final products), used for any purpose in the factory; (ii) packing materials in respect of which any exemption to the extent of the duty of excise payable on the cost of the packing materials is being availed of for packing any final products; (iii) packing materials or containers, the cost of which is not included in the value of the final products under section 4 of the Act; and (iv) crates and glass bottles used for aerated water." "RULE 57Q. Applicability.- (1) The provisions of this section shall apply to goods (hereafter in this section, referred to as the "final products") described in column (3) of the Table given below and to the goods (hereafter, in this section referred to as "capital goods"), described in the corresponding entry in column (2) of the said Table, used in the factory of the manufacturer of final products. S. No. Description of capital goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and used in the factory of the manufacturer Description of final products 1 2 3 1 All goods falling under heading Nos. 82.02 to 82.11; All goods specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following, namely :- (i) all goods falling under Chapter 24; and (ii) all goods falling under heading Nos. 36.05 or 37.06. [(iii) ingots and billets of non-alloy steel falling under sub heading Nos. 7206.90 and 7207.90, manufactured in an induction furnace unit, whether or not any other goods are produced in such induction furnace, and hot re-rolled products of non-alloy steel falling under subheading Nos. 36.05 or 37.06. [(iii) ingots and billets of non-alloy steel falling under sub heading Nos. 7206.90 and 7207.90, manufactured in an induction furnace unit, whether or not any other goods are produced in such induction furnace, and hot re-rolled products of non-alloy steel falling under subheading Nos. 7211.11, 7211.19, 7211.30, 7211.52, 7211.59, 7211.60, 7211.92, 7211.99, 7213.90, 7214.90, 7215.90, 7216.10 and 7216.90 on which duty is paid under Section 3A of the Central Excise Act, 1944 (1 of 1944).] 2 All goods falling under Chapter 84 (other than internal combustion engines falling under heading No. 84.07 or 84.08 and of a kind used in motor vehicles, compressors falling under heading No. 84.14 and of a kind used in refrigerating and air-conditioning appliances and machinery, heading or sub-heading Nos. 84.15, 85.18, 8422.10, [8424.10, fire extinguishers falling under sub-heading No. 8424.80, 8424.91, 8424.99], 84.29 to 84.37, 84.40, 84.50, 84.52, 84.69 to 84.73, 84.76, 84.78, expansion valves and solenoid valves falling under sub heading No. 8481.10 of a kind used for refrigerating and air-conditioning appliances and machinery); 3 All goods falling under chapter 85 (other than those falling under heading Nos. 85.09 to 85.13, 85.16 to 85.31, 85.39 and 85.40; 4 All goods falling under heading Nos. 90.11 to 90.13, 90.16, 90.17, 90.22 (other than for medical use), 90.24 to 90.31 and 90.32 (other than of a kind used for refrigeration and air-conditioning appliances and machinery; 5 Components, spares and accessories of the goods specified against S. Nos. 1 to 4 above; 6 Moulds and dies; 7 Refractories and refractory materials; 8 Tubes and pipes and fittings thereof, used in the factory; 9 Pollution control equipment; 10 Grinding wheels and the like goods falling under sub-heading No. 6801.10; 11 Goods falling under heading No. 68.02; and 12 Lubricating oils, greases, cutting oils and coolants. (2)(i) The manufacturer of the final products shall be allowed credit of the duty of excise or the additional duty leviable under section 3 of the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as "specified duty") paid on the capital goods. (ii) The manufacture availing of the credit may utilise the same for payment of duty of excise payable on the final products manufactured in his factory. (ii) The manufacture availing of the credit may utilise the same for payment of duty of excise payable on the final products manufactured in his factory. (3) Notwithstanding anything contained in sub-rule (1), the manufacturer of the final products shall be allowed credit of additional duty leviable under section 3 of the Customs Tariff Act, 1975 (51 of 1975) on goods falling under Chapter heading No. 98.01 of the first schedule to the said Customs Tariff Act, to the extent of 75% of the said additional duty paid on such goods. (4) A manufacturer of the final products purchasing capital goods from a unit situated in a Free Trade Zone or from a hundred per cent export-oriented undertaking or from a unit in an Electronic Hardware Technology Park or Software Technology Parks and using them in the manufacture of final products, shall be allowed to take the credit of the specified duty paid on such capital goods only to the extent of duty which is equal to the additional duty leviable on like goods under section 3 of the Customs Tariff Act, 1975 (51 of 1975), equivalent to the duty of excise paid on such capital goods. (5) The credit of the specified duty on capital goods (other than those capital goods in respect of which credit of duty was allowable under any other rule or notification prior to the 1st day of March, 1997) shall not be allowed if such capital goods were received in the factory before the 1st day of March, 1997. (6) A manufacturer shall be allowed credit of specified duty paid on capital goods manufactured by him for the manufacture of final products in his factory. (7) The credit of the specified duty on capital goods [other than those capital goods covered under S. Nos. 5, 7, 10, 11 and 12 of column (2) of the Table below sub-rule (1)] and received in the factory on or after the 1st day of January, 1996, shall not be taken on a date prior to the date on which such capital goods are installed or, as the case may be, used for manufacturer or a person designated by him for this purpose. (8)Notwithstanding anything contained in sub-rule (7), a manufacturer intending to remove the capital goods from his factory for home consumption or for export, prior to their being installed or used, as the case may be, shall be allowed to take credit on the date on which such capital goods are so removed by him from his factory on payment of the appropriate duty of excise leviable thereon as provided in rule 57S." 14. First we would consider the question whether 'Welding Electrodes' can be considered to be 'input', attracting MODVAT credit under Rule 57A and 57B of Rules, 1944. 15. It is admitted case of appellant that "Welding Electrodes" as such have nothing to do with manufacture of 'sugar' and 'molasses' and other products, but, same is used for the purpose of repair and maintenance of machines worn out during the process of running of factory. If no repair or maintenance is required for certain period, "Welding Electrodes" shall never be used. Thus for the purpose of manufacture of 'sugar' and 'molasses' and other by-products in which business the appellant is engaged, the requirement of "Welding Electrodes" is not at all, necessarily an integral part. It is only when repair or maintenance of machines is needed that requirement of "Welding Electrodes" may be necessary. 16. The term used in Rule 57A and 57B i.e. 'input' means, as used in or in relation to manufacture of final products. This user, in or in relation to, may be direct or indirect. It may not be necessarily used in final production which contains such 'input', but it could be used in or in relation to manufacture of final products. Despite our repeated query learned counsel appearing for appellant could not explain as to how "Welding Electrodes" can be said to have been used in or in relation to the manufacture of final products. He simply says that repair and maintenance of plant and machinery is an integral part of manufacture process and therefore, it should be included within the aforesaid term, but, we find that argument advanced by him is highly far fetched and goes to the extent of making the use of explanation clause in Rule 57A and 57B as noticed above, redundant. If what he says is treated to be correct, then land, bricks, cement, concerte, and even nut bolts etc. If what he says is treated to be correct, then land, bricks, cement, concerte, and even nut bolts etc. every thing would come within the ambit of Rule 57A and 57B. 17. In our view, it can be safely said that under Rules 57A and 57B, there is no term within which 'Welding Electrodes', as such, may fall. Our attention was drawn to Rule 57B(1)(iv), where MODVAT credit has been allowed to 'inputs' used for manufacture of final products or for any other purpose within the factory of production. Similarly, our attention was also drawn to Rule 57B(1)(vi) which allowed MODVAT credit on accessories on final products cleared alongwith such final products, value of which is included in the assessable value of final products. Learned counsel for appellant could not explain as to how 'Welding Electrodes' can be said to be used for manufacture of final products or accessories of final products, so as to bring within aforesaid provisions. 18. Looking to aforesaid provisions as applicable at the relevant time which is in dispute in the present appeal, we are clearly of the view that 'Welding Electrodes' would not come within the category 'inputs' so as to qualify for MODVAT credit under Rule 57A read with Rule 57B of Rules, 1944. 19. Sofar as question, whether it can be treated as 'capital goods' or not, this question in respect to period of 1999, has already been considered in Central Excise Appeal No. 135 of 2005 - Upper Ganges Sugar & Industries Ltd. Vs. C.C.C.E., 2015 (4) ADJ 245 (DB) decided on 25.02.2015 and it has been held that it will not come within category of 'capital goods' under Rule 57Q of Rules, 1944, as was applicable in 1999. 20. For the period in question larger bench of Tribunal in Triveni Engineering and Industries Ltd. Vs. Commission of Central Excise, Meerut (Supra), has also considered the question whether 'Welding Electrodes' are 'capital goods' so as to eligible MODVAT credit for period 1999 under Rule 57Q of Rules, 1944 and has answered the same against assessee and in favour of Revenue. 21. In J.P. Rewa Plant Vs. CCE Raipur (supra), larger bench of Tribunal considered whether 'Welding Electrodes' and 'gases' used in fabrication/manufacture of 'capital goods' for captive consumption would be eligible for CENVAT credit under CENVAT Rules, 2000. 21. In J.P. Rewa Plant Vs. CCE Raipur (supra), larger bench of Tribunal considered whether 'Welding Electrodes' and 'gases' used in fabrication/manufacture of 'capital goods' for captive consumption would be eligible for CENVAT credit under CENVAT Rules, 2000. Since the period of dispute was April, 2000 to September, 2000, it held that 'Welding Electrodes' used for repair and maintenance of machines cannot be considered to have been used in relation to manufacture of final products. 22. Learned counsel for appellant sought to rely on Rule 2(b)(iii) of CENVAT Rules, 2002, but we find that said Rules are not applicable in the case in hand, where matter is governed by Chapter AA and AAAA of Rules, 1944, as substituted by notification dated 01.03.1997. 23. The questions aforesaid, therefore, are answered against assessee and in favour of Revenue. 24. Appeal is hereby dismissed.