IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA Excise Reference No. 11 of 2003 Judgment reserved on: 16.9.2008 Date of decision : September 24, 2008 Commissioner of Central Excise …Petitioner(s). Versus. M/s Gontermann Peipers (I) Ltd.. …Respondent(s). --------------------------------------------------------------------------------------------------- Coram The Hon’ble Mr. Justice Deepak Gupta, Judge . The Hon’ble Mr. Justice V.K.Ahuja, Judge. Whether approved for Reporting ? For the Petitioner (s): Mr. Sandeep Sharma, Assistant Solicitor General of India. For the Respondent (s): M/s Sudeep Singh & Rahul Mahajan, Advocates. __________________________________________________________________ Deepak Gupta, J . This following question has been referred to this Court by the learned Tribunal for its opinion:- “Was the Tribunal justified in ignoring the fact that the humidification plant falling under chapter heading 84.15.00 of the schedule to Central Excise Tariff Act, 1985 was specifically excluded from the definition of the capital goods under Rule 57Q of the Central Excise Rules, 1944 (as applicable at relevant time) and allowing Modvat credit on the same inspite of this exclusion?” - 2 - A manufacturer is entitled to claim credit of the duty paid on capital goods used by the manufacturer for manufacture of specified goods. There is no manner of doubt that humidification plant is a capital good within the meaning of Rule 57Q. The stand of the petitioner-department is that the humidification plant falls under category 84.15 and is, therefore, excluded in terms of entry No.2 in column 2 of the table attached to Rule 57Q which reads as follows:- “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, 84.18, 8422.10, 84,24, 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);” It is contended by Shri Sandeep Sharma, learned Assistant Solicitor General that a humidification plant is akin to refrigerating and air-conditioning plant falling under point 84.15 and, therefore, the manufacturer was not entitled to claim MODVAT credit for the same. - 3 - Heading No.84.15 of the Central Excise Tarrif Act reads as follows:- 84.15. 8415.00: Air conditioning machines, comprising a motor driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated. A bare perusal of the said heading shows that it only covers air-conditioning plants. Air-conditioning plants can be of two types. The first type of air-conditioning plant is where both temperature and humidity can be controlled and the second type of air-conditioning plant is one in which only temperature can be controlled but humidity cannot be separately regulated. Both types of air- conditioning plants are covered under sub-head 84.15. However, it is apparent that a humidification plant does not fall under this sub-heading. In a humidification plant there is no control of temperature and only the humidity is controlled. The essence of an air-conditioning plant is that the temperature is controlled. It is thus apparent that a humidification plant does not fall within the ambit of air- conditioning plant under sub-head 84.15. Consequently, the same cannot be said to be excluded from the definition of capital goods under Rule 57Q. - 4 - Accordingly, we answer the question in favour of the assessee and against the revenue. The excise reference is accordingly disposed of. ( Deepak Gupta ), J. September 24, 2008 ( V.K.Ahuja ),J. s.