Custom, Excise & Service Tax Tribunal
M/S Shakumbari Sugar & Allied ... vs Cce, Meerut-I on 23 March, 2012
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
West Block No.2, R. K. Puram, New Delhi.
Court No. 1
Date of hearing/decision: 23.03.2012
Honble Sh. Justice Ajit Bharihoke, President
Honble Sh. Rakesh Kumar, Member (Technical)
1.
Whether Press Reporters may be allowed to see 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
Excise Appeal No. 4056 of 2010 with Excise Stay No. 3953 of 2010
(Arising out of order in appeal No.166-CE/MRT-I/2010-11 dated 27.08.2010 passed by the Commissioner (Appeals) Central Excise, Meerut-I).
M/s Shakumbari Sugar & Allied Industries Ltd. Appellants
Vs.
CCE, Meerut-I Respondent
Present Shri Alok Arora, Advocate for the appellant.
Present Shri R.S. Meena, AR for the respondent.
Coram: Honble Mr. Justice Ajit Bharihoke, President
Honble Sh. Rakesh Kumar, Member (Technical)
ORAL ORDER NO.____
Per: Rakesh Kumar (Oral):
The facts leading to this appeal are, in brief, as under:-
1.1 Appellant are manufacturer of Sugar chargeable to central excise duty. The period of dispute in this case is from November, 1994 to August 1995 when they availed Modvat credit of central excise duty paid on inputs and capital goods as per the provisions of Central Excise Rules, 1944. Assistant Commissioner, vide order-in-original dated 17.4.97-
(a) Disallowed modvat credit of Rs. 48,14,702/- on various items of capital goods on the ground that the items are not covered by the definition of capital goods, as given in Rule 57Q of Central Excise Rules, 1944 and disallowed modvat credit of Rs. 4,99,229/- on the ground that credit has been taken without any valid documents; and
(b) Ordered the recovery of the above credit from the appellant.
The matter traveled upto the Tribunal, where it was disposed of vide Final Order No. A/551/2001-NB (DB) dt. 29.06.2001 by which while the Modvat credit demand of Rs. 4,99,229/- was upheld, the modvat credit of demand of Rs. 48,14,702/- was set aside and the matter was remanded to the Original Adjudicating Authority for denovo adjudication in the light of Larger Bench decision in the case of CCE, indore vs. Surya Roshini Ltd. reported in 2001 (42) RLT 817.
1.2 In de-novo adjudication proceedings, the Deputy Commissioner vide order dated 24.01.2002, confirmed modvat credit demand of Rs. 4,99,227/- (credit taken without document), though the same being upheld by the Tribunal, there was no necessity to re-adjudicate the same;
(b) disallowed modvat credit of Rs. 20,71,103/- on MS Angles, Channels, Sections, Sheets, Bars etc. used for erection of supporting structure for machinery and also disallowed credit of Rs. 35,000/- in respect of Bagasse baling frame;
(c) disallowed the credit of Rs. 1,02,234/- and Rs. 420651/- in respect of other chapter 73 and 84 items, on the ground that there were no valid duty paying documents in respect of these; and
(d) allowed credit in respect of remaining items.
1.2.1 The CCE, (Appeals) vide order dated 14.06.2004 -
(i) upheld the demand of (a) Rs. 4,99,229/- (credit taken without documents); and (b) Rs. 20,71,103/- in respect of MS angles, channels, bars etc. for supporting structure and (ii) reduced the demand of Rs. 102237/- in respect of Chapter 84 items to Rs. 41775/- and demand of Rs. 42065/- in respect of chapter 73 items to Rs. 38815/-.
1.2.2 The matter again travelled up to the Tribunal and the Tribunal vide Final Order No. 513/08-EX dated 18.07.2008 passed the following order, once again remanding the matter to original adjudicating authority for de-novo adjudication. After hearing both the sides, we find that the issue of admissibility of modvat credit in respect of various structures stands decided by the Tribunal in the Appellants own case vide Final Order No. 2062/05-SM dt. 5.12.2005, 408/08-SM dt. 15.01.2008 and 1005/2007-SM dated 1.6.2007. Learned Advocate also submits that the authorities below have denied the credit by observing that the duty paying documents were not available in some cases. However, he submit that no details are disclosed in the order but fairly agrees that wherever duty paying documents are not available, they would not claim credit.
In view of the above, we set aside the impugned order and remand the matter back to the original adjudicating authority to follow the earlier order of the Tribunal referred (supra) and to verify the invoices and adjudicate the order afresh.
1.3 In third round of de-novo adjudication proceedings, the Deputy Commissioner, vide order in original dated 7.12.2009, except for confirming the modvat credit demand of Rs. 4,99,229/- already upheld by Tribunals order No. A/551/2001-NB(DB) dated 29.06.2001 dropped the remaining demand including the demand of Rs. 20,71,103/- in respect of MS Angles, Channels, CTD Bars etc use for erection of supporting structures by following the Tribunals order No. 2062/05-SM dated 5.12.2005.
1.4. The department filed a review appeal against the Deputy Commissioners order and CCE (Appeals) vide order in appeal dated 27.08.2010-
(a) restored the modvat credit demand of Rs. 20,71,103/- in respect of structural steel items on the ground that the judgements of the Tribunal (order No. 2062/05-SM dated 5.12.2005, 408/08-SM dt. 15.01.2008 and 1005/07-SM dated 01.06.2007) mentioned in the Tribunals order are not applicable to the definition of capital goods for the period in question i.e. Nov. 1994 august 1995 period; and
(b) restored the demands of Rs. 1,02,237/- and Rs. 42,065/- on the ground that the same have been wrongly set aside.
1.5 Against the above order of CCE (Appeals), this appeal and stay application has been filed. This is the third round of proceedings before the Tribunal.
2. Heard both the sides. Though this matter is listed only for hearing of stay application, after hearing the same for some time we were of the view that since a short issue is involved and the matter is very old, there is no point in keeping the appeal pending. Accordingly, with the consent of both the sides, the appeal was heard for final disposal.
3. Shri Alok Arora, Advocate, the learned Counsel for the Appellant, pleaded that during the major period of dispute, the definition of capital goods, as given in Rule 57Q included plant, that only w.e.f. 16.3.1995 the rule 57Q was amended; that the term plant covers all the items which are installed in a factory and would include the supporting structures also, that the judgement of larger bench of the Tribunal in case of Vandana Global Ltd. vs. CCE, Raipur reported in 2010-TIOL-624 (CESTAT-Del.) referred to in the Commissioner (Appeals)s order is with regard to definition of capital goods as given in Rule 2(a) of the Cenvat Credit Rules, 2004 in which the definition of capital goods includes certain specific items and their parts, and accessories and does not include the plant, that the Tribunals judgement in case of Vandana Global Ltd. (supra), relied upon in the impugned order, is not applicable to this case, as in this case, during the period of dispute, the definition of capital goods included plant also which would include the supporting structures for the machinery that the credit of Rs. 102237/- and Rs. 42,605/- is in respect of goods of chapter 73 and 84 which were covered by the definition of capital goods, that this credit has also been wrongly denied; that in respect of definition of capital goods during the period of dispute, it is the judgement of the Apex Court in case of CCE, Coimbatore vs Jawahar Mills Ltd. reported in 2001 (132) ELT 3 (SC) which would be applicable and in terms of this judgement, the goods, in question, would be covered by the definition of capital goods and would be eligible for modvat credit. He, therefore, pleaded that the impugned order is not correct.
4. Shri S. R. Meena, the ld. Senior Departmental Representative, defended the impugned order by reiterating the findings of CCE (Appeals) in the impugned order and emphasized that the MS Angles, Channels, Sections, bars etc. used for fabrication and erection of supporting structures fixed to the earth are not covered by the definition of capital goods are given in Rule 57Q during the period of dispute.
5. We have carefully considered the submissions from both the sides and perused the records.
6. So far as modvat credit of Rs. 1,02,237/- and Rs. 42,065/- in respect of certain item of chapter 84 and chapter 73 of the Central Excise Tariff is concerned, from the perusal of the order in appeal dt. 27.03.2010 of CCE (Appeals) and the earlier order in appeal dt. 14.06.2004 of CCE (Appeals) in 2nd round of litigation, it is clear that there is no dispute about eligibility of these items for capital goods modvat credit. The dispute in respect of these items is on factual point as to whether the credit of these amounts had already been allowed by the Assistant Commissioner vide order dated 17.04.1997. According to appellant, invoices in respect of these items are available but still the modvat credit has not been allowed and is being demanded. We find that in para 4(d) and 4(e) of CCE (Appeals)s order dated 14.6.2004 in 2nd round of litigation, this point had been discussed and while the demand of Rs. 102237/- had been reduced for Rs. 41,775/-, the demand of Rs. 42,065/- had been reduced to Rs. 38815/-. In 3rd round of litigation, while the Deputy Commissioner vide denovo order in original dt. 7.12.2007 set aside both the demands without discussing the question of availability of duty paying documents, the CCE (Appeals) in the impugned order dated 27.3.2010 set aside the Deputy Commissioners order and confirmed the demands of Rs. 102237/- and Rs. 42605/- ignoring that in 2nd round of litigation, the CCE (Appeals) vide order dated 14.6.2004 had reduced those demands for Rs. 41,775/- and Rs. 38,815/- respectively after going through the records. We agree with the findings of CCE (Appeals) as per para 4(d) & 4(e) of his order dated 14.6.2004 and accordingly uphold the demand of Rs.41,775/- and Rs. 38,815/-
7. As regards the main point of dispute regarding the sustainability or otherwise of the modvat credit demand of Rs. 20,71,103/- in respect of MS angles, Channels, CTD bars, sheets etc. used for fabrication and erection of supporting structures of the machinery, this credit has been taken during Nov. 1994 August 1995 period. During period prior to 16.03.1995, the definition of capital goods as given in Rule 57Q of Central Excise Rules, 1944 was as under:
Capital goods means-
(a) Machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products;
(b) Components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment apparatus, tools and appliances for the aforesaid purpose; and
(c) Mould and dies, generating sets and weight bridge used in the factory of the manufacture With effect from 16.3.1995, the above definition was amended and in the new definition the general expression machines, machinery, plant, equipment, apparatus, tools and appliances used for was not there and instead, the definition of capital goods covered the goods of certain specific headings of the central excise tariff and their components, spare parts and accessories. The goods of chapter 73 were not mentioned in the new definition. The eligibility of capital goods modvat credit of M.S. angles, channels, sections, CTD bars etc used for fabricating and erecting supporting structures for machinery has to be examined on the basis of definition of capital goods, as it stood during the respective period of dispute.
8. The judgements of the Tribunal (order No. 2062/05-SM dated 5.12.05; 408/08-SM dt. 15.1.2008 and 1005/2007-SM dt. 1.6.2007) referred to by the Tribunal in its order No. 513/08-Ex dt. 18.7.2008 pertains to the period when the definition of capital goods covered the goods of certain specific tariff headings, their parts & components and some other specific items and machinery and did not include the general expression machines machinery, plant, equipment Subsequently these judgements were overruled by larger bench judgement of the Tribunal in case of Vandana Global Ltd. vs. CCE, Raipur reported in 2010 TIOL-624-CESTAT Del. LB wherein it was held that MS Angles, channels, bars, plates etc. used of erecting supporting structures are not eligible for cenvat credit either as inputs or as capital goods as these items are neither covered by the definition of capital goods not the same can be treated as input used for the mamnufacture of capital goods, as the supporting structure are capital assets fixed to the earth, not capital goods. But during period prior to 16.3.1995, to which this case pertains, the position was different and the definition of capital goods included plant also.
9. A larger Bench of the Tribunal in case of Jawahar Mills Ltd. vs. CCE, Coimbatore reported in 1999 (108) ELT 47 (Tri.-Del) while examining the eligibility of wires and cables, control panels, welding electrodes etc. for capital goods modvat credit for the period prior to 16.3.1995 has held that these items are covered by the term plant, as, as held by the Apex Court in its judgement in the case of Scientific Engineering House Pvt. Ltd. vs. CIT reported in AIR 1986 SC 338, the term plant covers whatever apparatus is used by a businessman for carrying on his business, - not his stock in trade which he buys or makes for sale, but all goods and chattels, fixed or movable, live or dead, which he keeps for permanent employment in his business. The larger bench in this judgement also held that for being covered by the definition of capital goods, an item need not have direct nexus with the final product being produced. On appeal to the Apex Court, this judgement of the Tribunal was upheld by Apex Court vide judgement reported in 2001 (132) ELT 3 (SC). Applying the ratio of this judgement the supporting structures for machinery being covered by the term plant, would be covered by the definition of capital goods and, hence, the MS Angles, Channels, Sections etc. being components of such supporting structures would also be covered by the definition of capital goods. The impugned order denying modvat credit in respect of MS Angles, Channels, Sections CTD Bars etc. used for supporting structuring for the period prior to 16.3.1995 is, therefore, not sustainable.
10. In view of the above discussion-
(a) the portion of the impugned order disallowing modvat credit in respect of MS Angles, Channels, Sections, bars, etc used for supporting structures for machinery for the period prior to 16.03.1995, is set aside and the portion of the order disallowing the modvat credit in respect of these items for the period w.e.f. 16.3.1995 is upheld;
(b) Out of modvat credit demand of Rs. 1,02,237/- and Rs. 42,605/-, the demand of Rs. 41,775/- and Rs. 38,815/- respectively is upheld.
The appeal is, therefore, partly allowed with consequential relief.
(Dictated & pronounced in open Court).
(Justice Ajit Bharihoke) President (Rakesh Kumar) Member (Technical) Ckp 1