G.A. Brahma Deva, Member (J)

1. The issue relates to availment of Modvat credit on capital goods. It was the contention of the party that because of the suppliers mistake of wrong classification, the assessee should not suffer for availing the Mod-vat credit in respect of capital goods. In this connection, the Counsel appearing for the appellant, drew my attention to the finding portion of the Assistant Commissioner, which is as under :

"I have thoroughly gone through the brochure on Cadmach Automatic Ultra Sonic Cleaning machine (CAUC-07) regarding its functions, its requirements in the present context and as to the requirement for a pharmaceutical industry. T am very much satisfied with the fact that it is a basic prerequisite process on which the other processes are based. The manufacturing process carried out by this product is sterilisation, by thoroughly washing the ampoule to remove all particles of contamination. It is classified under chapter sub-heading 8422.10 as Dish washing machines, by the supplier as a result the credit being denied. But 1 am of the opinion that it is not a dish washing machine of ordinary type but of a sophisticated and specialised in nature. Even the explanatory notes of HSN Volume 3 states the 8422.10 is for Dish washing machines for ordinary household uses. Hence, I am of the opinion that the correct classification is and must be 8422.80. The wrong classification on the part of the supplier should not be used to deny the credit duly entitled to the assessees. Hence, I am of the opinion that its hygienical cleanliness has foremost role to play. (AVE-07) machine, therefore, has no comparison and similarity with the dish washing machines. Therefore, it is not fair in tune with the Modvat philosophy to deny the credit on this capital goods, merely because it has been classified under Chapter 8422.10 by their suppliers. Also, because of the suppliers mistake of wrong classification, I do not see any reason to subject the assessee from the availment of Modvat credit on this capital goods.

Hence, I am of the opinion that the Cadmach Automatic Ultra Sonic cleaning machine is a capital goods falling within the purview of Rule 57Q."

2. On the other hand, Shri L. Narasimha Murthy, appearing for the appellants submitted that the item was under Chapter Heading 8422.10 as per the suppliers invoice, which excludes this item for availing the Modvat credit. But the Assistant Commissioner has clarified under Heading 8422.80 while allowing the credit. Furthermore, the Assistant Commissioner has no power to change the classification. In support of his argument, he referred to the decision of the Tribunal in the case of TELCO v. Commissioner of Central Excise, jamshedpur reported in 2001 (136) E.L.T. 305. In Para 5.2 of the said decision wherein, it was clearly held that "it is Central Excise authorities having jurisdiction over the factory of the manufacturer of the inputs which has to classify the inputs and not the Central Excise authorities having jurisdiction over the factory of the inputs receiver, who cannot change the classification done by the inputs manufacturer".

3. The Commissioner (Appeals) in the impugned order has clearly held that as can be seen from the facts and circumstances, "the only conclusion which can be drawn, is that the proper classification of the product at the suppliers end is under Heading 8422.10. The goods which are falling under the aforesaid heading are not eligible for Modvat credit under Rule 57Q".

4. Since the issue involved herein has been properly analysed by the Commissioner in the impugned order, and in view of the decision referred to above that the Assistant Commissioner has no power to change the classification, I do not find any infirmity in the impugned order. Accordingly, the appeal is hereby dismissed.