Custom, Excise & Service Tax Tribunal
M/S Jain Carbide & Chemicals Limited vs Cce, Raipur on 9 November, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi, Court No. 1 Date of hearing/decision: 09.11.2016 Excise Appeal Nos. 48 of 2007 with Misc. Application No. 50343 of 2015 & Excise Appeal No. 2342 of 2008 (Arising out of order in original No. Commissioner/RPR/82/2006 dated 11.10.2006 & O-I-O No. Commissioner/RPR/70/2008 dated 19.08.2008 passed by the Commissioner of Customs & Central Excise, Raipur). M/s Jain Carbide & Chemicals Limited Appellant M/s Hira Power and Steels Limited Vs. CCE, Raipur Respondent
Appearance:
Sh. K. M. Menon, Advocate for the appellant Sh. R. K. Manjhi, AR for the Respondent Coram:
Honble Mr. Justice (Dr.) Satish Chandra, President Honble Mr. Ashok K. Arya, Member (Technical) Final Order Nos. 55041 55042/ 2016 Per: Justice (Dr.) Satish Chandra:
The present appeals have been filed against the orders dated 11.10.2006 and 19.08.2008 passed by the Commissioner, Customs & Central Excise, Raipur.
2. Both the appellants are engaged in the manufacture of Ferro Alloys (silico manganese and ferro manganese) falling under chapter heading 7202 of the Central Excise Tariff Act. Both the appellants sought to set up a 20 MW captive power plant for supply of power exclusively to their factory. During the course of setting up of the power plant, the appellants used various items such as strips, angles, channels, plates, beam etc. in the machinery used therein as well as some in the factory of manufacture. The credit in respect of the inputs used in the power plant was disallowed on the ground that power plant is situated outside the factory of the production as observed by the Commissioner in para 4.8 of the impugned order dated 11.10.2006 and on the ground that power plant, Induction Furnace etc. are immovable properties and are not goods as mentioned in para 4.5 of the impugned order dated 19.08.2008.
3. After hearing both the sides, it appears that in the appellants (Hira Power & Steel Limiteds) own case reported in 2008 (229) ELT 408 (Tri. Del.), the benefit, in the same set of facts, was allowed for the inputs used in fabrication of captive power plant situated adjacent to the factory of production. It was observed by the Tribunal that the appellant submitted the revised site plan and are entitled for credit in respect of inputs used in fabrication of power plant. Therefore, the appellants are entitled for credit in respect of the inputs used in fabrication of captive power plant.
4. Regarding the issue related to angles, channels, plates used for fabrication of various capital goods, it appears that the issue is squarely covered by the decision of the Tribunal in the case of SKS Ispat and Power Ltd. vs. CCE, Raipur -2016-TIOL-2769-CESTAT-DEL. The issue regarding dumper and parts thereof, the assessee is using dumper for raw material handling and transportation of raw material within the plant. The dumpers are owned by the appellant. In the case of M/s Aditya Cement vs. CCE, Jaipur-II 2016-TIOL-2582-CESTAT-DEL the issue was decided in favour of the assessee. Similarly, in the case of Aditya Cement 2008 (221) ELT 362 (Raj.) it was observed that:
19. We are of the opinion that principle emerging from decisions of the Honble Supreme Court and of this Court applies to the present case also. In the light of the aforesaid principle, if we take into account the use of iron and steel ingot as parts and components of its machinery used in the manufacturing cement, railway track materials needed for transporting fuel as essential for manufacturing in the plant, it is clear that so far as the items of iron and steel are concerned, they are used as providing parts and components of the plant and machinery and becomes essential elements of the machine itself without which the machinery would not be functioning smoothly and properly. Therefore, the direct involvement of those parts and components which are essential to hold the machine become part and parcel of the machine itself. Such components and parts of the machine become eligible for availing modvat credit of duties paid thereon. In view thereof the appellants must be held entitled to avail modvat credit of duties paid on 5% of the total value of iron and steel purchased by manufacturer used as components and parts of the machines. It is not in dispute and no claim is laid to other 95% of the steel and iron.
20. So far as the claim to Railway Track material is concerned, it is common ground that the same has been used for transporting of coal and product of cement. Apparently, though the coal is not end product of the appellant but used as essential adjunct of plant for feeding it with fuel, the essential element of production process for manufacture of cement. Without supply of fuel the plant does not function. Therefore, the Railway Track used for one of the essential activity of running the plant itself cannot be kept out of consideration for availing modvat credit though which is not being used directly for the purpose of manufacture of cement. But if as an integral part of manufacturing cement bringing of coal directly to the machine from site, railway track is used, it becomes part of plant and of manufacturing process. Similarly, until the end product reaches in deliberable state, it remains part of the manufacturing process. In view of this matter the claim of the assessee in respect of modvat credit of duty paid on railway track material deserves to be sustained.
5. By following the above ratio, we set aside the impugned order on the issue.
6. By considering the totality of facts and circumstances of the case, the impugned orders have no merit and the same are set-aside. The assessee- appellants will get the relief accordingly. On the identical issue, Excise Appeal No. 2342 of 2008 (M/s Hira Power and Steel vs. CCE, Raipur) is also decided in favour of the assessee.
7. In the result, both the appeals are allowed by setting aside the impugned orders. Miscellaneous application also disposed of accordingly.
(Dictated and pronounced in the open Court).
(Justice (Dr.) Satish Chandra) President (Ashok K. Arya) Member (Technical) Pant