Custom, Excise & Service Tax Tribunal
Vikram Ispat Ltd vs Cce Raigad on 17 February, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. E/1340, 1341, 1342, 1343 and 1344/07 Mum
Arising out of Order-in-Appeal No. SRK/28 to 32/RGD/2007 dated 19.07.2007 passed by the Commissioner of Central Excise (Appeals), Mumbai II.
For approval and signature:
Shri. M.V. Ravindran, Member (Judicial)
Shri. P.R. Chandrasekharan, Member (Technical)
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
Vikram Ispat Ltd.
:
Appellant
Versus
CCE Raigad
Respondent
Appearance Shri Rajesh Ravindran, Advocate for appellant Shri V.K. Singh, SDR For Respondent CORAM:
Shri. M.V. Ravindran, Member (Judicial) Shri. P.R. Chandrasekharan, Member (Technical) Date of Hearing : 17.02.11 Date of Decision : 17.02.11 ORDER NO.
Per : M.V. Ravindran These appeals are against the Order-in-Appeal No. SRK/28 to 32/RGD/2007 dated 19.07.2007.
2. Heard both sides and perused the records.
3. Relevant facts arisen for consideration are that the appellants had availed CENVAT credit of duty paid on Iron Ore Pellets procured by them. As a part of technical requirement of manufacturing process, such iron ore pellets are sieved and put to a process in the factory premises, wherein the pellets which are less than 6 mm are segregated. Such segregated iron ore pellets of less than 6 mm are treated as waste and cleared on payment of appropriate duty. The revenue authorities felt that the appellant should have reversed the amount of CENVAT credit taken on such iron ore pellets. After coming to such conclusion they issued a show-cause notice to the appellants. The Commissioner dropped the proceedings initiated by the show-cause notice. Aggrieved by the order, the Revenue preferred an appeal before the learned Commissioner (Appeals). The Commissioner (Appeals) has set aside the order-in-original by recording the following:-
In the instant case, the respondents are manually / mechanically segregating the Iron Ore Pellets / lumps below 6 mm size from the bigger pellets / lumps as the technology employed by them is such that only the pellets / lumps of size above 6mm have to be fed into the reactor. The only difference between the two types of inputs Iron Ore Pellets / lumps after the process of sieving is that the pellets / lumps of the size 6mm are suitable for use by the respondents and those of the size below 6 mm are not suitable for use by the respondents. Otherwise there is no difference whatsoever. The suitability of use by a particular manufacturer cannot be a criterion to decide whether the process of manufacture stipulated in the Act has taken place or not. The Iron ore pellets / lumps of size below 6mm are not the result of the manufacturing process but of physical segregation before the commencement of manufacturing process. Therefore, the credit taken on the said iron ore pellets / lumps was required to be reversed. Accordingly, impugned orders cannot be sustained and have to be set aside.
4. The learned Counsel appearing on behalf of the appellants submit that in an identical issue for the period from January 2001 to September 01, in the assessees own case, the Revenue was in appeal before the Tribunal and the Bench has held in favour of the assessee. He produces a copy of the said decision. On specific query from the Bench, the learned Counsel submit that the said decision was produced before the learned Commissioner (Appeals) but the learned Commissioner (Appeals) has not recorded any findings. He would draw our attention to paragraphs of 5, 18 and 19 of the said judgement.
5. The learned SDR on the other hand submits that the issue in the decision which has been produced before the Bench in the appellants own case as cited in 2007 (211) ELT 60 was not an identical issue which is in question.
6. On a specific query from the Bench, both the sides submit that the Revenue has not gone in appeal against the final order of Tribunal. On careful consideration of the submissions made by both the sides, we find that in the assessees own case (as has been cited above) the issue was as under:-
5. It may be stated that iron ore fines which is the subject matter of the above two orders were being cleared by M/s Vikram Ispat on payment of duty at the sale price at which it was being actually sold under protest as they were claiming that these being waste are not liable to duty. Subsequently four show-cause notices were issue for the period January 2001 to September, 2001, stating that since the iron ore fines cleared by the appellant were nothing but iron ore pellets i.e. inputs on which CENVAT credit was taken the said fines should have been cleared on payment of duty equal to the amount of credit availed in respect of such inputs as required under Rule 57AB of the Central Excise Rules, 1944 / Rule 3 of the erstwhile CENVAT Credit Rules,2001. The show-cause notice since demanded differential duty to the extent of Rs.2,52,15,062/-. These show-cause notices were dropped by the Commissioner holding that since the fines has been held by him in earlier order to be waste, they cannot be considered as inputs cleared as such and therefore the provision of Rule 57AB were not applicable. It is against this order of the Commissioner dropping the demand that the Revenue has come up in appeal vide its Appeal No. E/1375/05.
7. It is seen that the Bench had recorded a clear findings in paragraphs 18 and 19 which are reproduced as under:-
18. We have considered the submission. We find that the basic question to be decided is whether the fines (pellets) of size less than 3 mm are to be considered as a waste material arising either during the process of manufacture or that they have become waste in or in relation to the manufacture of final products. We find that what was ordered by the appellants was pellets of specified size and they could not get material which was completely free of fines and further the revenue has not been able to produce any evidence to show-cause notice that pellets of above 6 mm were available in the market without any fines. We also note that by the very nature of goods fines arise due to rubbing/colliding of the pellets during transportation and is therefore a natural phenomenon which cannot be avoided. It is undisputed that fines at Stage 2 have arisen during the transportation of the material from stock yard to the reactor. Therefore the generation of fines in the process of manufacture is inevitable. Since for the manufacture of the final product the appellant can use pellets of size 6 mm and above only as is also borne out by the affidavit of the Senior Vice President. Pellets of less than 6 mm is a waste for them as it cannot be used by them in their manufacturing process. It is also on record that such material was lying as waste in their factory premises for years till they could find some buyer which also found its use in the cement industry. There is no material to show-cause notice that these fines could have been used by any one for manufacture of sponge iron or hot briquette iron. We do not reach the reactor. In that view the manufacturing process can be stated to have started from the stage of screening and in any case screening is to be considered as a process in or in relation to the manufacture of final product. Since Rule 57D specifically provides that the credit of duty is not to be denied or varied on the ground that part of the inputs is contained in any waste or refuse or by product arising out of the final product or inputs has become waste in or in relation to the manufacture of final product, the credit of in this case cannot be denied on such fines which certainly have become waste for the appellants in or in relation to the manufacture of final product. Our view finds support, from the Tribunal decision in the case of Hindustan Petroleum (cited supra) where it has been held that in or in relation to manufacture of final product covers entire manufacturing process from initial stage of handling of inputs and the Supreme Court decision in the case of Collector v. Rajasthan State Chemical Works 1991 (55) ELT 444 (S.C.) wherein it has been held that the process of handling / lifting / pumping / transfer / transportation of raw materials also a process in or in relation to the manufacture, it integrally connected with further operations, which constitute manufacture. We therefore hold that the credit has been correctly availed and dismiss revenues appeal No. E/3310/04 and allow M/s. Vikram Ispats appeal E/416/06 by setting aside the order of the Commissioner (Appeals) dated 7.11.2005.
19. As regards third appeal No. E/1375/05 filed by the revenue, as we have already held that the fines are in the nature of waste, its clearance cannot be equated with the clearance of inputs as such and consequently the provision of Section 57AB cannot be attracted. We therefore uphold the order of the Commissioner in dropping the demand and reject the Revenues appeal.
8. It can be seen from the reproduced findings of the decision of the Tribunal and the decision of the first appellate authority in this case, the issue is squarely covered in favour of the assessee in this case.
9. In the foregoing, we are of the considered view that the impugned order is liable to be set aside and we do so. The appeals are allowed impugned order is set aside.
(Dictated in open Court) (P.R. Chandrasekharan) Member (Technical) (M.V. Ravindran) Member (Judicial) nsk 6