Custom, Excise & Service Tax Tribunal
Kesoram Cement vs Ccce&St, Hyderabad-Iii on 19 February, 2018
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Division Bench Court I Appeal No: E/2919/2011 (Arising out of Order-in-Original No. 18/2011-CE-Hyd III/Admn, Commr., dated 29.07.2011 passed by CCCE, Hyderabad-III Commissionerate, Hyderabad) Kesoram Cement ..Appellant(s) Vs. CCCE&ST, Hyderabad-III ..Respondent(s)
Appearance Shri B. Seshagiri Rao, Advocate for the Appellant. Shri B. Guna Ranjan, Superintendent /AR for the Respondent. Coram:
Honble Mr. M.V. RAVINDRAN, MEMBER (JUDICIAL) Honble Mr. C.J. Mathew, MEMBER(TECHNICAL) Date of Hearing: 19.02.2018 Date of Decision: 19.02.2018 FINAL ORDER No. A/30282/2018 [Order per: M.V. Ravindran]
1. This appeal is directed against Order-in-Original No. 18/2011-CE-Hyd III/Admn, Commr., dated 29.07.2011.
2. Heard both sides and perused the records.
3. The issue involved in this case is regarding denial of cenvat credit of Central Excise duty paid on items like angles, channels, joists, TMT bars, mill plates etc. during the period January 2006 to November 2010. Lower authorities have come to a conclusion that these items are not capital goods nor components in machineries and therefore are not covered under the definition of inputs also as they are used for manufacturing/fabrication of items which are finished or making structures for support of capital goods.
4. Ld. Counsel brings to our notice that the capital goods manufactured out of these items are coal cyclones, chutes, coolers/castings, vibrofeeders, T/Crushers, bucket elevators, pre-dusters, dust collectors and pollution control equipment, hoppers/silos etc. and TMT bars used for fabrication of Fly Ash Silos. He would submit that this is no more res integra as pre and post Notification No. 16/2009-CE(NT), dated 07.07.2009, the judgment of the Tribunal Principal Bench in the case of Singhal Enterprises Pvt. Ltd. vs. CCCE, Raipur [2016(341) ELT 372 (Tri.-Del.)] would apply in its full force as also Monnet Ispat & Energy Limited Vs. CCE, Raipur [2015(330) ELT 711 (Tri.-Del.)] which is in respect of similar items. He would also rely upon the decision of Honble Supreme Court in the case of Rajasthan Spinning & Weaving Mills Limited [2010(255)ELT 481 (SC)] .
5. Ld. DR, on the other hand, submits that cenvat credit availed on TMT bars needs to be excluded as the explanation to insert the definition of inputs clearly indicates exclusion of various items used for construction of factory shed, building or laying of foundation for making of structures for support of capital goods.
6. On careful submissions made by both sides, we find that the adjudicating authority has rejected the claim of the appellant for cenvat credit of approximately Rs. 1.91 Crores only on the ground that these inputs are not capital goods and they cannot be considered as inputs and has relied upon the decision of Larger Bench of Honble Tribunal in the case of Vandana Global Limited vs. CCE, Raipur.
7. We find that the issue of extending cenvat credit under inputs as indicated herein above, now stands decided by the judgment and order of Tribunal in the case of Singhal Enterprises Pvt. Ltd. (supra) wherein the Bench went into the definition of inputs and also the explanation 2 which was inserted from 07.07.2009 that user test needs to be applied as was stated by Apex Court in the case of Rajasthan Spinning & Weaving Mills Limited and considered the decisions and also the judgment of the Larger Bench of the Tribunal in the case of Vandana Global Limited, in para 15 held as under:
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.
8. The same ratio arises in the case of Monnet Ispat & Energy Limited. Since the issue is now settled in favour of the appellants contentions, we hold that the impugned order is unsustainable to the extent of denial of cenvat credit of Rs.1.91 crores (approx.) as also the interest and penalty. However, confirmation of demand of Rs. 1,83,950/- and Rs. 49,248/- alongwith interest needs to be upheld as no details are coming forth. Accordingly, confirmation of demand of Rs. 1,83,950/- with interest and penalty is upheld and confirmation of demand of Rs. 49,248/- alongwith interest is upheld, but we find no reason to visit the appellant with penalty on this amount.
9. Appeal stands disposed of, as indicated herein above.
(Dictated and pronounced in the open Court) (C.J. MATHEW) (M.V. RAVINDRAN) MEMBER (TECHNICAL) MEMBER (JUDICIAL) vrg Appeal No: E/2919/2011 (1)