Custom, Excise & Service Tax Tribunal
M/S. Beekay Steel Industries Limited vs Cce & St, Pondicherry on 18 November, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH, CHENNAI Appeal No. E/42110/2014 (Arising out of Order in Appeal No. 128/2014 (P) dated 02.07.2014, passed by the Commissioner of Central Excise (Appeals), Chennai) M/s. Beekay Steel Industries Limited Appellant Versus CCE & ST, Pondicherry Respondent
Appearance Shri Venkatachalam, Adv., For the Appellant Shri L. Paneer Selvam, AC (AR) For the Respondent/Assessee CORAM Honble Shri P.K. CHOUDHARY, Judicial Member FINAL ORDER No. 41714 / 2015 Date of Hearing : 18.11.2015 Date of pronouncement:
The appellant M/s. Beekay Steel Industries Limited, No. 10 Kumaravadi Village, Madhuranthagam Taluk, Kancheepuram District, is aggrieved against the Order in Appeal No. 128/2014 (P) dated 02.07.2014, passed by the Commissioner (Appeals), has filed this appeal.
2. The brief facts of the case are that the appellants are manufacturers of Non-alloys and Alloys, Bright bars falling under the chapter heading No. 72 of the CETA, 1985 and are availing cenvat credit on welding electrodes used in or in relation to the manufacture of finished goods. The period involved is from April, 2008 to July, 2010. Periodical SCNs were issued to the appellants objecting cenvat credit availed on welding electrodes. The details of the SCNs and the issue in dispute are as under:-
S.No. No. and date of the SCNs Amt. in Rs.
Period involved 1 25/2010 dated 06.09.2010 18,086 April, 2008 to July, 2010 2 21/2011 dated 29.04.2011 5,815 August, 10 to March, 11 3 22/2012 dated 16.04.2012 23,301 April, 2011 to March, 12 4 5/2013 dated 19.03.2013 8,618 April,12 to December,12 The adjudicating authority, the Ld. Assistant Commissioner held that since the welding electrodes is used for working on Capital goods, the same will not qualify for Input and accordingly it will not qualify for cenvat credit under Cenvat Credit Rules, 2004. On appeal, the Ld. Commissioner (Appeals) upheld the order of the adjudicating authority. Hence the present appeal.
3. The Ld. Counsel appearing on behalf of the appellants Shri S. Venkatachalam, Advocate, reiterated the grounds of appeal and submitted that the Ld. Commissioner (Appeals) has passed the order without considering the arguments put-forth by the appellants and therefore, the impugned order is in violation of principles of natural justice. Since it is a non speaking order and hence abinitio void and liable to be quashed. He further submitted that the demand made in the first SCN dated 6/9/2010 is barred by limitation. He submitted that the first SCN has been issued subsequent to the appellants letter No. BSIL/F/VS/012/10-11 dated 24.08.2010, wherein it was categorically mentioned that the appellants have used the impugned goods as input for pass racking material catching in the roll which determines the shape of the final products. Further, mentioned that the said electrodes have been used in the Guide Box for fabrication to separate the roll pass at the entry of Heated Billets in the manufacturing process. He further submitted that this has not been mentioned in the SCN otherwise they could have explained it in the reply to the SCN itself. There was no such examination done by the department and the allegation was only based on the presumption and assumption without taking into consideration of the usage of the said welding electrodes for repairing rolls which are vital capital goods used directly in relation to the manufacture of final products. Hence, the impugned order has no merits and not sustainable. He relied on the following citations in support of his contentions:-
1. CCE, Trichy Vs. CESTAT, Chennai 2014 (309) ELT 71 (Mad.)
2. CCE, Trichy Vs. India Cements Ltd.
2009 (238) ELT 411 (Mad.)
3. CCE, Coimbatore Vs. Madras Aluminium Co. Ltd.
2008 (226) ELT 342 (Mad.)
4. Samruddhi Cement Ltd. Vs. CCE, Indore 2013 (297) ELT 562 (Tri.-Del.)
5. DSM Sugar Vs. CCE, Meerut 2013 (297) ELT 53 (Tri.-Del.)
6. Kisan Co-op. Sugar Factory Ltd. Vs. CCE, Meerut 2013 (296) ELT 523 (Tri.-Del.)
7. Maihar Cement Vs. CCE, Bhopal 2013 (296) ELT 209 (Tri.-Del.)
8. Ambuja Cements Eastern Ltd. Vs. CCE 2010 (256) ELT 690 (Chhattisgarh)
9. Hindustan Zinc Ltd. Vs. CCE 2010 (251) ELT 468 (Tri.-Del.)
10. J.K. Cement Works Vs. CCE 2010 (252) ELT 249 (Tri.-Del.)
4. The Ld. AR Shri L. Paneer Selvam, AC, reiterated the findings of both the OIO and the OIA. He relied on the judgment in the case of Vikram Cement Vs. CCE, Indore 2009 (242) ELT 545 (Tri.-Del.), wherein the Tribunal held that the credit on welding electrodes used for repair and maintenance is not available as input. He further submitted that Boards Instruction No. 267/11/2010-CX dated 08.07.2010, wherein it has been clarified by the Board that the definition of capital goods is not inclusive and only the items covered under the definition and used in the factory of the manufacturer can be treated as capital goods. He submitted that since the appeal is devoid of any merits, the Commissioner (Appeals) has rightly upheld the order of the adjudicating authority.
5. Heard both sides and on perusal of records, I find that the issue involved in this case relates to availment of credit on welding electrodes during the period covered under four SCNs in terms of Rule 14 of CCR, 2004. On going through the citations filed by the Ld. Advocate, I find that the ratio decided in some of the cases are squarely applicable to the present appeal. The relevant paragraphs of the respective decisions are quoted here for better appreciation of the ratio laid down by the Honble High Court and the Tribunal.
1. CCE, Trichy Vs. CESTAT, Chennai (supra) is as under:-
16.?As far as item Nos. (v), (vi), (vii), (viii), (ix) and (x) MS Plates various sizes, Oxygen Gas, Acctyne gas, MS Welding electrodes, Aluminium Welding wire and CI Welding wire are concerned, these inputs were under the consideration of Tribunals decision in the assessees own case reported in 2001 (136) E.L.T. 182 (Tribunal-Chennai) (MALCO v. CCE, Coimbatore) which is subsequently confirmed by the Division Bench of this court in the case reported in 2008 (226) E.L.T. 342 (Madras), CCE v. Madras Aluminium Ltd. Therefore, these items are also eligible for credit.
2. CCE, Coimbatore Vs. Madras Aluminium Co. Ltd. (supra) 6.?In respect of oxygen gas, acetylene gas, electrodes, welding wire and pig iron, the Tribunal held that Modvat credit were to be allowed following the judgment of the Tribunal in 1993 (67) E.L.T. 364. The issue has been covered in favour of the assessee by the decision of the Apex Court in the case of C.C.E., Coimbatore v. Jawahar Mills Ltd., 2001 (132) E.L.T. 3 in which the earlier decision of the Supreme Court in the case of Indian Farmers Fertiliser Co-operative Ltd. v. C.C.E., Ahmedabad, AIR 1996 SC 2542, has been taken note of. Incidentally with regard to all these issues, the department has contended that the case of Jawahar Mills Ltd. - 1999 (108) E.L.T. 47 held in favour of the assessee has been taken on appeal by the department to the Supreme Court and the same is pending. Now the Supreme Court in 2001 (132) E.L.T. 3 decided the issue in favour of the assessee.
3. The Tribunal in the case of DSM Sugar Vs. CCE, Meerut (supra) is as under:-
6.?As regards the welding machines and welding electrodes, the same were being used for repair and maintenance of the plant and machinery. I find that the Larger Bench of the Tribunal in the case of Jawahar Mills Ltd. reported in - 1999 (108) E.L.T. 47 (Tribunal) has specifically held that welding electrodes and welding machines is eligible for Cenvat credit. This judgment of the Tribunal has been upheld by the Apex Court reported in 2001 (132) E.L.T. 3 (S.C.). In view of this, the denial of Cenvat credit in respect of these items is also not sustainable. The Tribunal allowed cenvat credit on welding electrodes used in or in relation to the manufacture of finished goods. By respectfully following the High Courts decision (supra), I hold that the assessee is eligible for availing cenvat credit on welding electrodes used in or in relation to the manufacture of finished products.
6. The Revenue relying on the Vikram Cement Vs. CCE, Indore (supra), is not relevant in view of the jurisdictional High Court of Madras decision and other Honble High Court orders as discussed above, I am of the view that the impugned order, is not sustainable. The same is set aside and accordingly the appeal is allowed.
(Pronounced in open court on ____________) (P.K. CHOUDHARY) Judicial Member BB 1