Custom, Excise & Service Tax Tribunal
The Commissioner Of Customs And Central ... vs M/S. A.P.P. Mills Limited on 23 September, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
COURT - I
Appeal No: E/433/2009
(Arising out of Order-in-Appeal No. 1/2009 (V-II) CE dated 23.1.2009 passed by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Visakhapatnam.)
Date of Hearing: 23.9.2011
Date of decision: 23.9.2011
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 Lordship wish to see the fair copy of the Order?
4.
Whether Order is to be circulated to the Departmental authorities?
The Commissioner of Customs and Central Excise
Visakhapatnam-II Commissionerate
Visakhapatnam.
Appellant
Vs.
M/s. A.P.P. Mills Limited
Respondent
Appearance
For the appellants : Shri C. Saravanan, Advocate
For the respondents : Shri Ganesh Havannur, SDR
CORAM
SHRI P. G. CHACKO, HONBLE MEMBER (JUDICIAL)
FINAL ORDER No._______________________2011
In this appeal filed by the department, the short question arising for consideration is whether MS angles, plates and rounds used by the respondent for fabricating structural support to plant and machinery in their factory during the period from October 2006 to April 2007 could be held to be capital goods as defined under Rule 2(a) of the CENVAT Credit Rules (CCR), 2004 for purposes of CENVAT credit. The original authority denied the benefit to the assessee and ordered recovery of CENVAT credit of Rs.49,729/- under Rule 14 of CCR, 2004 read with Section 11A of the Central Excise Act, 1944. It also imposed a penalty of Rs.45,000/- on the party under Rule 15 of the CCR. In an appeal filed by the aggrieved party, the learned Commissioner (Appeals) granted the benefit to the appellant (assessee). Hence the present appeal of the Revenue.
2. Learned SDR submits that the aforesaid items stood excluded from the ambit of the definition of input by virtue of an explanation to Rule 2(k) and further that the said items were held to be outside the purview of the definition of capital goods by the Tribunals Larger Bench in the case of Vandana Global Ltd. Vs. CCE, Raipur - 2010 (253) ELT 440 (Tri.-LB). Learned SDR, therefore, prays for setting aside the appellate Commissioners order.
3. Per contra, the learned counsel for the respondent has relied on the Honble Supreme Courts judgment in CCE, Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd. - 2010 (255) ELT 481 (SC) and also on the Honble Madras High Courts judgment in CCE, Tiruchirapalli Vs. M/s. India Cements Ltd. - 2011-TIOL-558-HC-MAD-CX. According to the counsel, the view taken by the Honble Supreme Court on the facts of the case of Rajasthan Spinning & Weaving Mills Ltd. (supra) is squarely applicable to the facts of the present case. In this connection, he has particularly referred to paragraphs 8, 9, 12 and 13 of the apex Courts judgment. After adverting to the facts of this case, the learned counsel has endeavoured to strike a parallel between those facts and the facts of the case of Rajasthan Spinning & Weaving Mills Ltd. (supra). It is submitted that, in the instant case, MS angles, plates and rounds were used to fabricate structural supports to plant and machinery whereas, in the case considered by the Honble Supreme Court, similar items were used to fabricate a chimney for a diesel generating (DG) set. The chimney was held to be an integral part of the DG set and items used for its fabrication were held to be accessories of the DG set. Similarly the structural support fabricated by the respondent should be treated as an integral part of plant and machinery and therefore the MS angles, plates and rounds used for fabrication of the structural support should be held to be accessories. Learned counsel further points out that the benefit of apex Courts ruling was not available to the Tribunals Larger Bench when the case of Vandana Global Ltd. (supra) was decided.
4. After giving careful consideration to the submissions, I have found force in the arguments of the learned counsel. The ratio of the decision of apex Court is found to be squarely applicable to the facts of the instant case. The apex Court was seised of the question whether the steel plates and m.s. channels used in the fabrication of chimney would fall within the purview of Sl. No.5 of the table annexed to Rule 57Q as this Rule stood on or after 1.3.1997. The Rule considered by the court, shorn of unnecessary portions, is as follows:
RULE 57Q. Applicability. - (1) The provisions of this section shall apply to goods (hereafter in this section, referred to as the final products) described in column (3) of the Table given below and to the goods (hereafter, in this section, referred to as capital goods), described in the corresponding entry in column (2) of the said Table, used in the factory of the manufacturer of final products.
TABLE
Sl.
No
Description of capital goods falling within the schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and used in the factory of the manufacturer
Description of final products
(1)
(2)
(3)
1.
....................................
2. .......................
3. All goods falling under chapter 85 (other than those falling under heading Nos. 85.09 to 85.13, 85.16 to 85.31, 85.39 and 85.40);
4. ......................
5. components, spares and accessories of the goods specified against S. Nos. 1 to 4 above; The above provision requires to be compared with Rule 2(a) (shorn of unnecessary portions) of the CCR, 2004, reproduced below:
RULE 2.?Definitions - In these rules, unless the context otherwise requires, -
(a)?capital goods means :-
(A) the following goods, namely :-
(i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, [heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804] of the First Schedule to the Excise Tariff Act;
(ii) .
(iii) Components, spares and accessories of the goods specified at (i) and (ii);
(iv) .
(v) .
(vi) .
(vii) .
used -
(1) in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office; or (2) 4.1 Obviously, clause (i) of Rule 2(a)(A) is pari materia with clause (3) of the table annexed to Rule 57Q. Similarly, clause (iii) of Rule 2(a)(A) is pari materia with clause (5) of the table annexed to Rule 57Q. In the case of Rajasthan Spinning & Weaving Mills Ltd. (supra), the Honble Supreme Court considered the question whether the steel plates and channels used in the fabrication of chimney for DG set would fall within the purview of Sl. No.5 of the table annexed to Rule 57Q. The Honble Supreme Court found that the DG set fell under Heading No.85.02 Chapter 85, of First Schedule to the Central Excise Tariff Act and ipso facto got covered under Sl. No.3 of the table ibid. Honble Supreme Court further noted that the chimney attached to the DG set was undisputedly covered by Sl. No.5 of the table ibid. On this basis, it was held that the chimney was an integral part of the DG set and, therefore, ms channels, plates, etc., used in its fabrication were to be treated as accessories in terms of Sl. No.5 of the table ibid. This ruling was rendered by applying the user test. The facts of the present case are perfectly analogous to those of Rajasthan Spinning & Weaving Mills Ltd. (supra). It is not in dispute that ms angles, plates, etc., were used to fabricate structural support for machinery which was used for manufacturing excisable goods. It is, again, not in dispute that the machinery is squarely covered by clause (i) of Rule 2(a)(A) of the CCR, 2004. The immediate question is whether the structural support for the machinery could be treated as capital goods. Indeed, it should be held to be an integral part of the machinery and hence to be covered by clause (i) ibid. If that be so, as held by the Honble Supreme Court in the aforesaid case, the plates, angles, etc., used for fabricating structural support are liable to fall within the purview of clause (iii) of Rule 2(a) (A). In the result, it has to be held that the ms angles, plates and rounds used by the respondent for fabricating structural support for machinery would qualify to be capital goods for CENVAT credit. Consequently, the impugned order can only be sustained.
4.2 The view of the Tribunals Larger Bench in the case of Vandana Global Ltd. (supra), taken much before the Honble Supreme Court decided the case of Rajasthan Spinning & Weaving Mills Ltd. (supra), was to the effect that the supporting structure for a machinery could not be considered to be part or accessories of the machinery and, therefore, the steel items used for constructing such supporting structure would not be capital goods for the purpose of CENVAT credit. This view of the Larger Bench is no longer valid as it runs contrary to the subsequent ruling of the apex Court.
5. In the result, this appeal is dismissed.
(Pronounced and dictated in Open Court) (P. G. CHACKO) Member (Judicial) rv ??
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