Custom, Excise & Service Tax Tribunal
Ultratech Cement Ltd vs Cce &St, Jaipur-I on 9 November, 2016
IN THE CUSPTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing:3.10.2016
Date of Decision: 09/11/2016
Excise Appeal No.1169/2012-EX(DB)
[Arising out of Order-in-Appeal No.16/2012-CE dated 31.01.12 passed by the Commissioner of Central Excise, Jaipur-I]
Ultratech Cement Ltd. Appellant
Vs.
CCE &ST, Jaipur-I Respondent
Appearance:
Rep. by Shri B.L. Narsimahan, Advocate for the appellant.
Rep. by Shri Yogesh Agarwal, DR for the respondent.
Coram: Honble Mr. Justice (Dr.) Satish Chandra, President Honble Mr. B. Ravichandran, Member (Technical) Final Order No. 54959/2016 Per B. Ravichandran:
The appellants are engaged in the manufacture of cement and clinker liable to central excise duty. During the period March, 2007 to July, 2009, the appellants were in the process of setting up of cement plant and accordingly, purchased various steel items like M.S. Channels, Beams, Joists, Rounds, Seats, Angles, Plates, etc. for fabrication/erection, commissioning of various capital goods like ducts, hoppers, chutes, packing plates, air slides, duct support, bucket elevator tower, fuel and limestone handling equipment, cable tray, storage silo for fly ash, pipe support. These capital goods are part of various sections of cement plants like raw mills, limestone crusher, coal mill, kiln, pre-heater, etc. This aspect is not disputed. The proceedings were initiated against the appellant to deny cenvat credit on these iron and steel items on the ground that these items were used for the fabrication or manufacture of items, which have become immovable structures. The case was adjudicated by the Commissioner vide order dated 31.01.2012. It was recorded that the appellants used steel items for fabrication of items embedded to earth and laying foundation and for supporting structures. These cannot be treated either as inputs or capital goods and hence, the cenvat credit was denied. It was also held that the Explanation II to Rule 2(a) of Cenvat Credit Rules, 2004 introduced w.e.f. 7.7.2009 was only clarificatory and applicable for the past period also. Ld. Commissioner placed reliance on the decision of this Tribunal in the case of Vandana Global Ltd. 2010 (253)ELT 440 . The present appeal is against this impugned order.
2. We have heard the ld. Counsel for the appellant and ld. AR for the Revenue. We also perused the appeal records and the written submissions. The dispute is relating to appellants eligibility for cenvat credit of duty paid on various iron and steel items used in the factory for fabrication of various structures. The plea of the appellant is that these items were used as inputs in the manufacture of parts/components/accessories of specified capital goods of Chapter 82 , 84 and 85 of the Central Excise Tariff Act, 1985. Without these technological support structures, erection, installation and operation of huge machinery would not be possible. It was submitted that these technological structures, therefore, qualify to be considered as parts/components/accessories of all capital goods.
3. The availability of cenvat credit of duty paid on these types of steel items was subject matter of decision in large number of cases by the Tribunal, High Courts and Supreme Court. We note that in the present case, the main thrust of the contention by the Revenue to deny the credit is that the resultant fabricated items are immovable structures and hence, cannot be considered as goods and hence, the credit on these steel items used in such immovable structures cannot be allowed. We find that the immovability or otherwise of the resultant capital goods is not a criteria stipulated in the cenvat credit for consideration. Even otherwise, these various steel items were put to use in creation of various structures/accessories during a process of cutting, bending, etc. As held by the Tribunal in the case of Mahindra & Mahindra Ltd. 2005 (190)ELT 301 (Tribunal-LB) that the resultant product would be a dutiable item, at a stage before it is used as part of immovable structure.
4. In the present case, we note that a detailed certificate by the Chartered Engineer has been submitted by the appellant . It was certified that the goods are not permanently fixed to the earth /foundation. The items are attached to earth on suitable foundation with braces, ties, nuts, bolts. These fabrications are used to aligned them with main machinery. The Honble Supreme Court in the case of Rajasthan Spinning and Weaving Mills Ltd. 2010 (255) ELT 481 (SC), by applying user test held that the credit availed on steel items for fabrication of chimney was admissible. The principle of user test was applied in several cases to allow credit on various steel items. Some of the decisions of the Tribunal, Honble High Courts and Honble Supreme Court are listed below:-
(a) CCE Vs. India Cements Ltd.-2012(285) ELT 341(Madras)
(b) India Cements Ltd.-2015(321) ELT 209 (Mad.
(c) UOI Vs.Associated Cement Co.-2011(267) ELT 55(Chattisgarh)
(d) Singhal Enterprises Pvt.Ltd.-2016-TIOL-2451-CESTAT-DEL
(e) CCE V.Jindal Steel & Power Ltd.-2015(330)ELT708(T-Delhi)
(f) Jayaswal Neco Ltd. -2015(319) ELT 247(SC)
(g) Ispat Industries Ltd.-2006(195)ELT 164(T-Mum)
(h) SKS Ispat & Power Ltd.-Final Order No.53591/2016 dt.16.09.2016
(i) Ultratech Cement Ltd.-Final Order No.53625/2016 dt.16.09.2016.
The Tribunal in a recent case of the Singhal Enterprises (supra) held that the structural items used in the fabrication of support structures would qualify to be considered as parts of relevant machinery and fall within the ambit of capital goods in terms of Rule 2(a) of the Cenvat Credit Rules, 2004. Similar ratio has been followed by the Honble Punjab & Haryana HighCourt in the case of Pioneer Agro Extracts Ltd. 2008(230) ELT 597 (P&H).
5. The amendment carried out in Rule 2(a) to exclude cement, angles, channels, CTD, TMT bars and other items used for construction of factory sheds, building, or laying of foundation or making of structures for support of capital goods cannot be held to be retrospective. The Honble Madras High Court in the case of Thiru Arooran sugar 2015-TIOL-1734-HC-MAD-CX examined the admissibility of cenvat credit on M.S. Plates, angles, channels, H.R. Plates, used in the construction/erection of plant. The Honble High Court held as below:-
8. Learned Standing Counsel appearing for the Revenue heavily relied upon the decision reported in - 2011-TIOL-73-SC-CX (Saraswati Sugar Mills V. Comissioner of Central Excise, Delhi - III) in Civil Appeal No.5295 of 2003 dated 02.08.2011. However, we find that this Court has earlier considered the issue in C.M.A.No.1301 of 2005 dated 31.12.2012, wherein, while dismissing the appeal filed by the Revenue the Division Bench of this Court held as follows:
"8. Even though learned standing counsel appearing for the Revenue submitted that the judgment in the assessee's own case reported in AIT-2011-358-HC = 2011-TIOL-558-HC-MAD-CX (The Commissioner of Central Excise V. M/s. India Cements Limited) had been appealed against, as of today, there are no details; in any event, the fact herein is that the Revenue does not controvert the facts found by the Assistant Commissioner that the impugned goods were used for fabrication of structurals to support various machines like crusher, kiln, hoppers, pre-heaters conveyor system etc. and that without these structurals, the machinery could not be erected and would not function.
9. In the decision reported in AIT-2011-358-HC = 2011-TIOL-558-HC-MAD-CX (The Commissioner of Central Excise V. M/s. India Cements Limited), pointing out to Rule 57Q and the interpretation placed by the Apex Court in the decision reported in 2010 (255) E.L.T.481 = 2010-TIOL-51-SC-CX (Commissioner of Central Excise Jaipur V. Rajasthan Spinning & Weaving Mills Ltd.) and in particular Paragraph Nos.12 and 13, wherein the Apex Court had applied the user test by following the Jawahar Mills's case, this Court held that steel plates and M.S.Channels used in the fabrication of chimney would fall within the ambit of "capital goods". In the face of this decision in the assessee's own case there being no new circumstance or decision in favour of the Revenue, we do not find any good ground to take a different view herein too.
10. As far as the reliance placed by the Revenue on the decision reported in 2011 (270) E.L.T.465 (SC) = 2011-TIOL-73-SC-CX (Saraswati Sugar Mills V. Commissioner of C.Ex., Delhi-III) is concerned, we do not think that the said decision would be of any assistance to the Revenue, considering the factual finding by the Tribunal therein in the decided case that the machineries purchased by the assessee were machineries themselves. Thus, after referring to the decision reported in 2010 (255) E.L.T.481 = 2010-TIOL-51-SC-CX (Commissioner of Central Excise Jaipur V. Rajasthan Spinning & Weaving Mills Ltd.), the Apex Court held that in view of the findings rendered by the Tribunal that the machineries were complete and having regard to the meaning of the expression "components/parts", with reference to the particular industry in question, the Apex Court rejected the appeal filed by the assessee.
11. Thus going by the factual finding, which are distinguishable from the facts found by the Authorities below in the case on hand, we have no hesitation in rejecting the Revenue's appeal, thereby confirming the order of the Tribunal.
12. Learned standing counsel appearing for the Revenue pointed out that the Tribunal had merely passed a cryptic order by referring to the earlier decisions. We do not think that this would in any manner prejudice the case of the Revenue, given the fact that on the identical set of facts, the assessee's own case was considered by this Court and by following the decision reported in 2010 (255) E.L.T.481 = 2010-TIOL-51-SC-CX (Commissioner of Central Excise Jaipur V. Rajasthan Spinning & Weaving Mills Ltd.), the Revenue's appeal was also rejected. In the circumstances, this Civil Miscellaneous Appeal is dismissed. No costs. Consequently, C.M.P. No.16107 of 2005 is also dismissed."
9. From a perusal of the above said judgment, it is seen that there is no change in the circumstance and this Court had already considered the issue and held that the decision reported in - 2011-TIOL-73-SC-CX (Saraswati Sugar Mills V. Commissioner of Central Excise, Delhi - III) in Civil Appeal No.5295 of 2003 dated 02.08.2011 is distinguishable on facts. This Court applied the principles laid down in the decision reported in 2010 (255) E.L.T.481 = 2010-TIOL-51-SC-CX (Commissioner of Central Excise Jaipur V. Rajasthan Spinning & Weaving Mills Ltd.) and held in favour of the assessee.
10. Hence, following the principles laid down in the decision reported in 2010 (255) E.L.T.481 = 2010-TIOL-51-SC-CX (Commissioner of Central Excise Jaipur V. Rajasthan Spinning & Weaving Mills Ltd.) and the earlier decision of this Court in C.M.A.No.3101 of 2005 dated 13.12.2012, we are inclined to allow the appeal, thereby set aside the order of the Tribunal.
6. The Honble High Court held that such exclusion made w.e.f. 7.7.2009 cannot be given retrospective effect. The said ratio has been followed by the Tribunal in various cases.
7. The demand was also contested on the question of time bar. The period covered by the demand is from March, 2007 to July, 2009 and the show cause notice was issued on 29.11.2010 well beyond the normal period. As noted above, the issue involved in the present case is the subject matter of long dispute and also has been considered by the various High Courts and the Tribunal in different situations. The Larger Bench of the Tribunal in the case of Vandana Global Ltd. (supra) has held that in such situation, extended period of limitation is not invokable. We note that the issue involved in the present dispute is one of interpretation of the provisions of Cenvat Credit Rules and various other legal principles. Admittedly, certain contrary views have been taken by the various judicial bodies. In such situation, we find that invoking longer period of demand on the ground of fraud, suppression, willful misstatement, etc. is not tenable. Hence, on the question of time bar also, the present demand is not sustainable.
8. In view of the above discussion, we find both on merits as well as on time bar, the case against the appellant for denial of credit cannot be sustained. Accordingly, we set aside the impugned order and allow the appeal.
[Order pronounced on 9.11.2016.] ( Justice Dr. Satish Chandra) President ( B. Ravichandran ) Member (Technical) Ckp.
1Excise Appeal No.1169/2012-EX(DB)