Custom, Excise & Service Tax Tribunal
M/S.Mideast Integrated Steels Ltd vs Commissioner Of Central Excise & ... on 9 September, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No. E/71226/13
(Arising out of Order-in-Appeal No.19/CE/BBSR-I/2013 dated 24.06.2013 passed by the Commissioner(Appeals) of Central Excise, Customs & Service Tax, Bhubaneswar.)
FOR APPROVAL AND SIGNATURE
HONBLE SHRI H.K.THAKUR, 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
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
M/s.Mideast Integrated Steels Ltd.
Applicant (s)/Appellant (s)
Vs.
Commissioner of Central Excise & Service Tax, BBSR-I
Respondent (s)
Appearance:
Shri K.K.Achariya, Advocate for the Appellant Shri S.Mukhopadhyay, Supdt.(AR) for the Revenue CORAM:
Honble Shri H.K.Thakur, Member(Technical) Date of Hearing/Decision :- 09.09.2016 Date of Pronouncement :- 09.09.20916 ORDER NO.FO/A/76020/2016 Per Shri H.K.Thakur.
This Appeal has been filed by the Appellant against Order-in-Appeal No.19/CE/BBSR-I/2013 dated 24.06.2013 passed by the Commissioner(Appeals) of Central Excise, Customs & Service Tax, Bhubaneswar as first appellate authority.
2. Shri K.K.Achariya (Advocate) appearing on behalf of the Appellant submitted that out of the total Cenvat Credit denied by the first appellate authority, an amount of Rs.67,581/-(Rupees Sixty Seven Thousand Five Hundred and Eighty One only) pertains to Cenvat Credit taken on steel and bent, which is not being contested by the Appellant. That the remaining credit is with respect to EOT Crane and Gratings which are capital goods and credit is admissible to the Appellant under Cenvat Credit Rules. Ld.Advocate submitted that EOT Cranes are over-head Cranes moving on fixed rails and pulleys. That these parts on which over-head Crane moves are essential for the working of the Cranes and cannot be considered as support structures. Learned Advocate relied upon the HSN Explanatory Notes given under Heading 84.26 to argue that where fixed parts of the over-head Cranes are also supplied along with the main equipment or are essential features of the over-head Cranes, then the same have to be classified under Heading 84.31 as accessories of the main machine. Learned Advocate relied upon the following case laws where credit on such accessories like Crane Rail, Crane Column, Crane Girder has been allowed:-
(i) Commissioner of C.Ex. & S.T., Raipur v. SKS Ispat And Power Ltd.
[2015 (326) ELT 620 (Tri.-Del.)]
(ii) Commissioner of Central Excise, Raipur v. Jindal Steels & Power Ltd.
[2015 (330) ELT 708 (Tri.-Del.)] 2.1 So far as Cenvat Credit on Gratings is concerned, learned Advocate relied upon the case law of Rosa Sugar Works v. Commissioner of Central Excise, Lucknow [2006 (194) ELT 456 (Tri.-Del.)] where CESTAT Delhi has held that Cenvat Credit on Ladders and Gratings when used for processing or procuring finished goods then the Cenvat Credit is admissible. Learned Advocate argued that making of Gratings is essential for the functioning of the furnace.
3. Shri S.Mukhopadhyay, Supdt.(AR) appearing on behalf of the Revenue argued that items like EOT Crane, MS Joists, MS Chhanels, MS Angles etc. are only support structures fixed to the ground therefore Cenvat Credit cannot be allowed. Learned AR strongly defended the order passed by the first appellate authority.
4. Heard both sides and perused the case records.
5. It is observed that certain items like pulleys and rails are fixed to the walls on which over-head EOT cranes are moving. As per HSN Explanatory Notes under 84.26 for Gantry Cranes and over-head cranes, the beam of the cranes runs on rails fixed on walls or on suitable supporting metal structures. It is also explained that when such machines are fitted or designed to be fitted with the mechanical features essential for operation of the moving parts of the complete installation (like beams, rollers, pulleys, guide rails etc.) then the same will also be classified under Tariff Heading 84.31. In view of the above when structures like rollers, pulleys and guide rails are essentially required for the functioning of crane then the same have to be treated as an accessory of the machines for which Cenvat Credit under Cenvat Credit Rules is admissible.
6. The above view is also fortified by the case law of Commissioner of Central Excise, Raipur v. Jindal Steels & Power Ltd. (supra) where Cestat Delhi has passed following observations :-
5.?Heard both the sides and examined appeal records. The Revenue appeal is on the short point that the steel structures which are emerging are not capital goods. They are either support structures or platforms, frames, foundations, and parts of civil structure not covered by the category of capital goods. In this regard, we find that learned Commissioner (Appeals) in Para 8.5 of the impugned order examined the nature and functions of each one of the impugned items specifically with reference to the scope of capital goods as per Rule 2 of Cenvat Credit Rules and came to the conclusion that these impugned goods can be classified into three groups namely the first group consists of Crane Girder & Crane Rail, Crane Column, Crane Surge Girder and Crane Auxiliary Girder. The uses of these goods in the respondent factory are that Crane Girder and Crane Rail are provided to hold the crane rails in position so that overhead crane is able to move at a required height. Crane rails are used for long travel of EOT crane; Crane Columns function to transfer the handled load to the ground when overhead crane is working by combined action of axial force and bending moment. Crane Surge Girder & Crane Auxiliary Girder are used to hold crane girder in position properly while crane is working. In view of their use, all these goods are essential accessories for EOT crane installed in respondents factory as EOT crane cannot perform without them. The second group includes Base Frames for various machines/machineries such as Air Pre-heater, SH Casing, Coal Feeder, Deacrator Drum, ID Fan, Motor, Ash Dryer/Pump, (Ash Dyke Motor and Pump) and Silo Pump. All these Base Frames are fabricated/manufactured according to specific design and drawing for specific requirement and on which various machines/machinery of the plant are installed for achieving required rigidity and vibration free function. These Base Frames are not performing any individual function as a machine and machinery but they are essentially required to be installed along with machines and machinery for the beneficial enjoyment. No heavy machine/machinery can be installed without base frames. Therefore in my opinion, all these frames are essential accessory of that machine with which it is installed. The third group is consist of chimney and flue duct. Chimney is used for emission of fumes and gases and flue duct is used for holding transferring gases for their emission through chimney. They are essential accessories in the respondent plant. Therefore, all the impugned goods as mentioned above are covered in the scope of term accessories in the definition of capital goods at clause (ii) of Rule 2(b) of the Cenvat Credit Rules because they are specifically designed, fabricated/ manufactured as per specific technical requirements and they are technological necessity of the plant for the manufacture of Iron and steel products in respondents factory and they are essentially required for running the plant and machinery. Since no evidence has been adduced to establish that these goods have not been used in the factory of manufacturer and therefore the respondent has complied with the condition of Rule 2(b) of Cenvat Credit Rules that such goods should be used in the factory of the manufacturer of final product.
7. So far as Cenvat Credit on Gratings used for operating the furnace is concerned, it is observed that such platforms are essential for operating the machines used in the manufacture of finished goods. In the case of Rosa Sugar Works v. Commissioner of Central Excise, Lucknow (supra), CESTAT Delhi has held that ladders and gratings used for reaching different platforms of the machines, used for processing or procuring finished goods, are eligible to Modvat Credit under Rule 57A of the Central Excise Rules, 1944. The ratio laid down by the CESTAT Delhi in the case of Rosa Sugar Works v. Commissioner of Central Excise, Lucknow (supra) is squarely applicable to Cenvat Credit of capital goods under Rule 3 of the Cenvat Credit Rules, 2004.
8. In view of the above observations and the settled proposition of law Cenvat Credit with respect to EOT Crane and Gratings availed by the Appellant is available. However, Cenvat Credit of Rs.67,581/-(Rupees Sixty Seven Thousand Five Hundred and Eighty One only) with respect to steel and bent items is not agitated by the Appellant and is held to be inadmissible.
9. In view of the above observations and settled proposition of law Appeal filed by the Appellant is partly allowed to the extent indicated hereinabove.
(Operative part of the order was pronounced in the open court.)
SD/
(H.K.THAKUR) MEMBER(TECHNICAL)
sm
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Appeal No.E/71226/13