Custom, Excise & Service Tax Tribunal
M/S Jai Raj Ispat Ltd vs Commissioner Of Central Excise on 9 June, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/26537/2013-SM [Arising out of Order-in-Appeal No. 25/2013/BM dated 15/18.02.2013 passed by Commissioner of Central Excise (Appeals) Mangalore] M/s Jai Raj Ispat Ltd., Sy No. 67 & 68, Belgal Village, Bellary -583115 Appellant(s) Versus Commissioner of Central Excise Belgaum Respondent(s)
Appearance:
Mr. H.Y. Raju Adv For the Appellant Mr. N. Jagadish , A.R. For the Respondent Date of Hearing: 28/03/2017 Date of Decision:09/06/2017 CORAM: HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 20861/ 2017 Per : S.S GARG
The present appeal is directed against the impugned order dated 15.02.2013 passed by Commissioner (Appeals) whereby the Commissioner(Appeals) has allowed the departments appeal and set aside the order-in-original and confirmed the demand of Rs 1,51,278/- in terms of Rule 14 of the Cenvat Credit Rules 2004 read with Proviso to Section 11A(1) of the Central Excise Act 1944 along with interest and penalty.
2. Briefly the facts of the case are that the appellants are engaged in the manufacture of sponge iron falling under Chapter 72 of the Schedule to the CETA 1985. During the course of audit of the records of the respondent for the period from November 2009 to September 2010 it was noticed that the appellant had availed Cenvat credit on structural items such as MS angles, channels, joists and beams as capital goods. It appeared that the said structural steel items falling under Chapter 72 are used for supporting kiln are not covered under the definition of capital goods in terms of Rule 2(a) of the Cenvat Credit Rules 2004 and hence the credit availed by the appellant is not in order. On these allegations, a show-cause notice dated 5.3.2012 was issued by the department demanding irregularly availed cenvat credit of Rs 1,51,278/- during the year 2009-10, 2010-2011 and the adjudicating authority after following the due process of law held that the appellants are eligible to avail cenvat credit on structural items such as MS angles and channels, joists and beams and dropped the proceedings in the case. Aggrieved by the said order, the department filed appeal before the Commissioner on the basis of the larger Bench decision in the case of Vandana Global and also on the basis of Vikram Cement Vs CCE Indore [2005 (187) ELT 145 SC] and the Commissioner (Appeals) allowed the appeal of the department and set aside the impugned order. Hence the present appeal.
2. Heard both the parties and perused the records. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without appreciating the provisions of the Cenvat credit and without following the binding judicial precedents on the issue. He further submitted that the disputed items MS angles, channels, joists and beams have been used for supportive structure of machinery of kiln-II in their factory for the period prior to amendment of explanation 2 to Rule 2(k) of CCR 2004. In support of his submission, he relied upon the following decisions:
1) Singhal Enterprises Pvt Ltd Vs CCE & C [2016(341) ELT 372 (Tri-Del0]
2) Andhra Sugars Ltd Vs CCE & C Guntur [2016(343)ELT 1051(Try-Hyd]
3) Madras Cements Ltd Vs CCE Hyderabad[2016(336)ELT 175 (Try-Hyd)] On the other hand learned A.R. relied upon the following decisions:
1) Saraswati Sugar Mills Vs CCE Delhi [2011(270)ELT 465 (S.C.)]
2) Madras Cements Ltd Vs CCE [2010(254)ELT 3(SC)
3) Madras Cements Ltd Vs CCE Trichy [2005(192)ELT 902(Tri-Che)
4) Bajaj Hindustan Ltd Vs UOI [2013(295)ELT 20 (All]
5) CCE & C Ghaziabad Vs Rathi Steel & Power Ltd [2015 (321)ELT 200 (All)]
3. After considering the submissions of both the parties and perusal of the material on record, I find that the issue is no more resintegra and has been settled in favor of the appellant by various decisions relied upon by the learned counsel for the appellant. In the case of Singhal Enterprises Pvt Ltd (supra), the division bench of this Tribunal has held that the structural steel item such as MS angles, channels, TMT bars etc. used in fabrication of support structure for various capital goods are eligible for Cenvat credit. It is pertinent to reproduce para 5 of the said decision which is reproduced herein below:
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 v. Rajasthan Spinning & Weaving Mills Ltd., 2010 (255) E.L.T. 481 (S.C.), 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 v. Jawahar Mills Ltd., 2001 (132) E.L.T. 3 (S.C.), 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. The Honble High Court of Madras in the case of CCE Trichy Vs India Cements Ltd and India Cements Ltd Vs CESTAT Chennai [2015(321)ELT 2009 had an occasion to consider the eligibility of credit availed on steel items and cement as capital goods used for construction of support structures of capital goods. The credit was held to be admissible. The Honble Court observed that the steel items being used for fabrication of structures for support/erection of various machines by applying the user test as laid in Rajasthan Spinning and Weaving Mills case [2010 (255) ELT 481(SC) would be eligible for credit as capital goods. Therefore following the ratios of the decisions cited (supra), I am of the view that the impugned order is not sustainable in law. Therefore I set aside the impugned order by allowing the appeal of the appellant.
( Order was pronounced in Open Court on 09/06/2017) S.S GARG JUDICIAL MEMBER Pnr..
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