Custom, Excise & Service Tax Tribunal
M/S. Mahendra Sponge & Power Pvt. Ltd vs C.C.E., Raipur-I on 28 September, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST BLOCK NO.2, R.K. PURAM, NEW DELHI 110 066. Date of Hearing/Order : 28.09.2016 Application No.E/CROSS/244/2011-EX[SM] Appeal No.E/1659/2011-EX[SM] [Arising out of Order-in-Appeal No.53/RPR-I/2011, dated 15.04.2011 passed by C.C.E.(Appeals), Raipur-I] M/s. Mahendra Sponge & Power Pvt. Ltd. Appellant Vs. C.C.E., Raipur-I Respondent
Appearance Mr. Manish Sharma, Advocate - For Appellant Mr. M.R. Sharma, DR - For Respondent CORAM: Honble Mr. V. Padmanabhan, Member (Technical) Final Order No.54010/2016, dated 28.09.2016 Per Mr. V. Padmanabhan :
The present appeal is directed against Order-in-Appeal, dated 31.03.2011 passed by the Commissioner (Appeals), Raipur. The appellant is a manufacture of sponge iron, billets, MS ingots, etc. falling under Chapter 72 of the Schedule to the Central Excise Tariff Act, 1985. The controversy in the present case covers the period October, 2008 to April, 2009 during which the appellant availed cenvat credit on various structural materials such as angles, channels, beams, etc. as well as welding electrodes. The Department during audit found that the appellant was using the structural items in the erection and maintenance of support structure of the capital goods such as induction furnace, power plant, etc. in the manufacturing plant for sponge iron. Input such as oxygen gas, welding electrodes, etc/ were used for repair and maintenance purpose. The credit was sought to be denied by issue of Show Cause Notice dated 28.10.2009. The original authority vide its order dated 28.09.2010 confirmed the duty demand to the extent of Rs.10,41,143/-. The same was upheld in the impugned order. Hence, the present appeal.
2. Heard Shri Manish Saran, ld. advocate for the appellant and Shri M.R. Sharma, ld. Departmental Representative for Revenue.
3. Ld. advocate submitted that the structural items on which cenvat credit has been availed, were used by them in the factory for manufacture of parts of capital goods, mostly used as supporting structures. Welding electrodes also have been used for such purpose as well as for repairing of capital goods. He submits that the benefit stands allowed by the Tribunal in the case of Singhal Enterprises Vs. CCE, Raipur [2016-TIOL-2451-CESTAT-DEL]. He, also pointed out that the cited decision is on identical facts.
4. Ld. Departmental Representative while reiterating the findings of the Commissioner (Appeals), fairly concedes that the decision of the Tribunal in the case of Singhal Enterprises Vs. CCE, Raipur (supra) covers the issue in favour of the appellant.
5. Heard both sides and perused the records.
6. I have also examined the decision of the Tribunal in the case of Singhal Enterprises Vs. CCE, Raipur (supra). The said decision has also been given in the context of structural items on which cenvat credit has beene availed and used in the fabrication of support structures. These have been considered as parts of capital goods and have been allowed the benefit of cenvat credit. The credit of duty paid on welding electrodes has also not been held allowable. The Tribunal in the case of Singhal Enterprises Vs. CCE, Raipur (supra) held as under:-
13. Now we turn to the question, whether credit is admissible on various structural steel items, such as, MS Angles, Sections, Channels, TMT Bar etc., which have been used by the appellants in the fabrication of support structures on which various capital goods are placed? The same stands denied by the lower authority. The learned DR has sought disallowance of the same by citing the decision of the Larger Bench in the case of Vandana Global Ltd. (supra) and other judgments. Further, he has brought to our notice and emphasized the amendment carried out in Explanation-II to Rule 2(a) which defines the term Input w.e.f. 07.07.2009. It has further been pleaded that the Cenvat Credit claimed for the period prior to this will be covered within the decision of the Larger Bench in the case of Vandana Global Ltd. (supra).
14. The Larger Bench decision in Vandana Global Ltd. case (supra) laid down that even if the iron and articles were used as supporting structurals, they would not be eligible for the credit. Considering the amendment made w.e.f. 07.07.2009 as a clarification amendment and hence to be considered retrospectively. However, we find that the said decision of the Larger Bench was considered by the Honble Gujarat High Court in the case of Mundra Ports & Special Economic Zone Ltd., 2015 (04) LCX0197, wherein ti was observed that the amendment made on 07.07.2009 cannot be held to be clarificatory and as such would be applicable only prospectively.
15. We find that the controversy can be laid to rest by making a reference to the decision of the Apex Court in the case of CCE, Jaipur vs Rajasthan Spinning & Weaving Mills Ltd., 2010 (255) ELT 481 (SC), wherein the Honble Supreme Court has considered an identical issue of steel plates and MS channels used in the fabrication of chimney for diesel generating set. The credit stands allowed in the light of Rule 57Q of the erstwhile Central Excise Rules, 1944. In the said judgment, the Apex Court has referred to the user test evolved by the Apex Court in the case of CCE, Coimbatore vs Jawahar Mills Ltd., 2001 (132) ELT 3 (SC), which is required to be satisfied to find out whether or not particular goods could be said to be capital goods. When we apply the user test to the case in hand, we find that the structural steel items have been used for the fabrication of support structures for capital goods. The appellants have argued that the various capital goods, such as, kiln, material handling conveyor system, furnace etc. cannot be suspended in mid air. They will need to be suitably supported to facilitate smooth functioning of such machines. It is obvious that the structural items have been suitably worked upon for this purpose. Accordingly, the goods fabricated, using such structurals, will have to be considered as parts of the relevant machines. The definition of Capital Goods includes, components, spares and accessories of such capital goods. Accordingly, applying the User Test to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of Capital Goods as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit.
15. In line with the discussions, we set aside the impugned order and allow the appeal.
7. I find that the issue is no more res integra and stands squarely covered by the cited decision of the Tribunal. Accordingly, I set aside the impugned order and allow the appeal. The cross objections filed by Revenue also stands disposed of.
(V. Padmanabhan) Member (Technical) SSK -6-