Custom, Excise & Service Tax Tribunal
M/S Kalyani Steel Ltd vs Commissioner Of Central Excise on 8 August, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH
BANGALORE
Appeal(s) Involved
E/26622/2013-SM
[Arising out of Order-in-Appeal No. 34/2013/BM dated 26/02/2013 passed by Commissioner of Central Excise (Appeals) Mangalore-I]
For approval and signature
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s Kalyani Steel Ltd.,
Hospet Road,
Ginigera
Koppal Distt-583 228
Appellant(s)
Versus
Commissioner of Central Excise,
Belgaum
Respondent(s)
Appearance:
Mr M.S. Nagaraja, Adv For the Appellant Mr Parashiva Murthy, A.R. For the Respondent Date of Hearing: 04/08/2016 Date of Decision: 08/08/2016 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 20618 / 2016 Per : S.S GARG The present appeal is directed against the impugned order passed by learned Commissioner (Appeals) who vide his order dated 26.02.2013 has partly allowed the appeal by allowing the capital goods CENVAT credit on HR coils, HR steel plates, beams etc. used for fabrication of girders and denied the CENVAT credit with regard to columns holding the same to be used as support structures for the factory shed as well as the EOT cranes and thereby denying the CENVAT credit on the same.
2. Briefly the facts of the present case are that the appellant is a manufacturer of pig iron alloy and non-alloy steels and has been taking CENVAT credit on capital goods, inputs and input services. The Dy Commissioner of Central Excise, Bellary issued a show-cause notice dated 13.12.2011 based on the internal audit report dated 12.07.2011 alleging that the assessee has taken credit of Rs 3,87,961/ on HR coils, HR sheets, plates, beams etc. used as columns for erection of EOT crane during the year 2010-2011. The show-cause notice further alleges that HR coils, HR sheets, plates and beams are used as support structure for EOT cranes which are fixed on the ground for civil foundation and immovable in nature and not used in relation to manufacture of final products and hence credit is not admissible. The appellant filed a reply and controverted the allegation in the show-cause notice but the Dy Commissioner vide his order dated 27.11.2012 confirmed the demand of CENVAT credit of Rs 3,87,961/- and also demanded interest and imposed equal penalty under Rule 15 of CENVAT Credit Rules 2004 read with Section 11 AC of the Central Excise Act 1944. Aggrieved by the said order, the appellant filed an appeal before the Commissioner who vide impugned order dated 26.02.2013 held that EOT cranes is not placed on parallel girders/rails which are mounted on columns of the factory shed. The EOT crane is used for lateral as also horizontal movement of goods. The girders are essential for horizontal movement of the EOT crane and hence considered eligible for credit. Since the columns are used as support structures for factory shed as well as EOT crane, the credit is not admissible. Thus the learned Commissioner partly allowed the credit and disallowed the credit on columns for the EOT crane. Vide impugned order the Commissioner disallowed CENVAT credit of Rs 2,55,434/- on steel items used for fabrication of columns. Aggrieved by the impugned order, the appellant has filed the present appeal.
3. The learned counsel for the appellant submitted that the findings of the learned Commissioner denying the CENVAT Credit on HR coils, HR plates, beams used for fabrication of columns for the EOT crane is wrong and illegal. Learned counsel for the appellant also showed me the photographs of the EOT crane and its mounting shows that the crane is mounted on girders/rails for lateral or horizontal movement. He also submitted that without the vertical members, the EOT crane cannot be mounted and operated at the required height for handling of goods. The vertical members are essential for facilitating horizontal movement of the crane and are in the nature of components and accessories of the EOT crane. He also submitted that the findings of the learned Commissioner in the impugned order that the vertical members/columns are supporting structure and that they do not support the shed or factory is not correct. In support of his submissions, he relied upon the following authorities.
1) CCE Vs Jindal Steel & Power Ltd., [2015(330)ELT708(t)
2) Mukund Ltd Vs CCE[2016(333)ELT 479(T)
3) UOI Vs ACC Ltd [2011(267)ELT 55(Chhattisgarh)
4) Mehra Bros Vs Joint Commercial Officer [1991(51)ELT 173(SC) On the other hand learned A.R. reiterated the findings of the Commissioner and submitted that the columns act as a support structure of shed and therefore cannot be considered as capital goods. He further submitted that the columns do not play any role in the functioning of the machinery of which the appellant had claimed as accessories of the crane.
4. On a perusal of the records, I find that the learned Commissioner has held that the crane column is only a supporting structure and does not fall in the definition of capital goods for the purpose of claiming CENVAT credit. In fact crane column is used to hold crane girders in position properly while the crane is working. In view of this use, it is essential accessories for EOT crane installed in the appellants factory as EOT crane cannot function without the crane column. Moreover, the division bench of the Tribunal in the case of CCE Vs Jindal Steel & Power Ltd (supra) where exactly the same issue was involved has held that the columns of the crane are covered in the scope of the term accessories in the definition of capital goods and the assesseee was entitled to take the CENVAT credit on the same. Therefore keeping in view the decision in the above said case, I hold that the impugned order on which credit has been denied is covered in the scope of the terms accessories, in the definition of capital goods at clause (ii) of Rule (2)(b) of CENVAT Credit Rules 2004 because it is specifically designed fabricated/manufactured as per specific technical requirement. Since no evidence has been adduced by the Revenue to establish that these goods have not been used in the factory of the appellant and therefore, the appellant 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. In view the aforesaid, I am of the considered opinion that the impugned order is not sustainable in law and therefore, I set aside the same by allowing the appeal of the appellant with consequential relief if any.
(Order pronounced in open court on 08/08/2016) S.S GARG JUDICIAL MEMBER pnr 4