Custom, Excise & Service Tax Tribunal
Cce, Raipur vs M/S Bharat Aluminium Co. Ltd on 7 November, 2008
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL NEW DELHI PRINCIPAL BENCH COURT NO. 1 Excise Appeal No. 4026 of 2006-SM (Arising out of Order-in-Appeal No. 155/RPR-I/2006 dated 28.08.2006 passed by the Commissioner of Customs & Central Excise (Appeals), Raipur). DATE OF HEARING : 07.11.2008 DATE OF DECISION : 07.11.2008 FOR APPROVAL AND SIGNATURE : HONBLE MS. JYOTI BALASUNDARAM, VICE-PRESIDENT 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 Lordships wish to see the fair copy of the Order ? 4. Whether Order is to be circulated to the Departmental Authorities? CCE, Raipur Appellant (Rep by Sh. R.K. Verma, DR) versus M/s Bharat Aluminium Co. Ltd. Respondent
(Rep. by Sh. B.L. Narsimhan, Adv.) CORAM : HONBLE MS. JYOTI BALASUNDARAM, VICE- PRESIDENT ORDER NO._______________________________ PER JYOTI BALASUNDARAM :
The respondents herein are engaged in the manufacture of aluminium products falling under Chapter 76 of the Central Excise Tariff Act, 1985. They were availing facility of Cenvat Credit on duty paid inputs and capital goods under Rule 57-Q read with Rule 57-T of the erstwhile Central Excise Rules, 1944. A show cause notice dated 31.07.1996 was issued to them proposing to disallow irregular Cenvat Credit of Rs. 7,06,111/- availed by them and for imposition of penalty on the ground that they had wrongly availed Cenvat Credit on Bucket elevator chain, Bucket for elevator, Gas collecting hood, and Maly kote grease, Welding electrodes, Gas filling used in smelter house, HA refractory cement, Rigid stem thermal, Aluminium wire, Brass Wire, M.S. forged round, M.S. round, Forged steel round, and Hot dia steel. Vide order dated 09.03.2006 the Additional Commissioner of Central Excise disallowed the entire credit and imposed a penalty of Rs. 2,00,000/- on the ground that none of the items qualify as capital goods. The Commissioner (Appeals) set aside the adjudication order and allowed the appeal of the respondents; hence this appeal against extension of credit on the following items :
(i) Bucket elevator chain;
(ii) Bucket for elevator;
(iii) Aluminium Wire;
(iv) Brass Wire;
(v) M.S. Forged Round;
(vi) M.S. Round;
(vii) Forged Steel Round;
(viii) Hot Dia Steel; and
(ix) Welding Electrodes
2. I have heard both sides. The definition of capital goods at the relevant point of time i.e January, 1996 reads as under :
Capital goods means
(a) machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products;
(b) components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose; and
(c) . . The show cause notice proceeded on the basis that Bucket elevator chain and Bucket for elevator are parts of handling equipment/parts of electrostatic precipitator. According to the Revenue, they do not play any role in the functioning of any machinery of which they had claimed to be parts. However, it is an admitted position in the show cause notice that these items are parts of material handling equipment/electrostatic precipitator. It is not the case of the Department that, material handling equipment/electrostatic precipitator are not machines, machinery, plant equipment etc. used for producing or processing any goods or for bringing about any change in any substance for the manufacture of final products. Hence, the parts thereof on which the disputed above mentioned items qualify for being considered as capital goods.
3. As regards the remaining items, their admitted use is as under:
S.NO. DESCRIPTION USES
1. Welding Electrodes For welding purpose
2. Aluminium Wire For joining the hockey stick of aluminium with steel anode studs
3. Brass Wire Electrodes for cutting dies in the wire cut machine.
4.
5.
6. M.S. Forged Round M.S. Round Forged Steel Round For repairing the anode stands of electrolytic cell
7. Hot Dia Steel For making dia for extrusion
4. According to the Revenue, electrodes used for welding purposes and other items used for repair and maintenance of anode studs of electrolytic cells, cannot be used directly as capital goods or parts/spares/accessories of the capital goods. However, this contention is not tenable in the case of Hindustan Zinc Ltd. vs Union of India, 2008 (228) ELT 517 (Raj.), the Honble Rajasthan High Court has held that Cenvat Credit is admissible on welding electrodes used for repairs and maintenance of plant & machinery. In the case of Union of India vs Hindustan Zinc Ltd., 2007 (214) ELT 510 (Raj.), the Honble Rajasthan High Court has held that MS/SS plates used in workshop meant for repair and maintenance of machinery which are used for manufacture of final product are eligible to avail credit. This decision has been upheld by the Apex Court as reported in 2007 (214) ELT A115 (SC). Once items, used for maintenance and repair of machinery, have been held to be eligible for Cenvat/Modvat Credit, there is no substance in the Departments plea that items used for such purpose are not eligible to Cenvat/Modvat Credit.
4. In the light of the above discussion, I hold that Bucket elevator chain and Bucket for elevator are eligible to credit as parts of material handling equipment and the other items which are used for repair and maintenance of machinery are eligible to credit in the light of the decisions cited (supra).
5. In the result, I uphold the impugned order and reject the appeal.
(Operative part was pronounced in the open Court on the 7th day of November, 2008) (JYOTI BALASUNDARAM) VICE-PRESIDENT Golay