Custom, Excise & Service Tax Tribunal
Cce, Meerut-I vs M/S Bajaj Hindustan Limited on 28 March, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi. Court No. 1 Date of hearing/decision: 28.03.2013 Honble Sh. Rakesh Kumar, Member (Technical) 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? Excise Appeal No. 2992 of 2010-SM (Arising out of order in appeal No. 72-CE/MRT-I/2010 dated 31.05.2010 passed by the Commissioner (Appeals), Central Excise, Meerut) CCE, Meerut-I Appellants Vs. M/s Bajaj Hindustan Limited Respondent
AND Excise Appeal No. 3051 of 2010-SM (Arising out of order in appeal No. 72-CE/MRT-I/2010 dated 31.05.2010 passed by the Commissioner (Appeals), Central Excise, Meerut) M/s Bajaj Hindustan Limited Appellants Vs. CCE, Meerut-I Respondent Present Sh. R. K. Mathur, DR for the Revenue.
Present Sh. S.C. Kamra, Advocate for the assessee.
Coram: Honble Sh. Rakesh Kumar, Member (Technical) Final Order No.55979 55980/ 2013 Per: Rakesh Kumar:
The appellant are manufacturers of sugar. The point of dispute is as to whether they are eligible for cenvat credit in respect of welding electrodes used for repair and maintenance of plant and machinery and rent a cab service availed for transportation of their employees from the residence to the factory and back. The total disputed amount of cenvat credit is Rs. 1,05,604/-. The department being of the view that the appellant are not eligible for cenvat credit in respect of welding electrodes and rent a cab service, issued show cause notice for its recovery alongwith interest and imposition of penalty. The original adjudicating authority vide order-in-original dated 30.10.2009 confirmed the cenvat credit demand of the above mentioned amount alongwith interest and imposed penalty of equal amount. On appeal being filed to Commissioner (Appeals) against this order of the Assistant Commissioner, the Commissioner (Appeals) vide order-in-appeal dated 31.05.2010 while upholding the cenvat credit demand set aside the penalty. Against this order of the Commissioner (Appeals), while the appellant M/s Bajaj Hindustan Limited have filed Appeal No. E/3051 of 2010, the Revenue has filed appeal No. E/2992 of 2010 challenging the Commissioner (Appeals)s order setting aside the penalty.
2. Heard both the sides.
3. Shri S.C. Kamra, Advocate, the ld. Counsel for the appellant, pleaded that both the issues involved in this case stands decided in favour of the assessee; that while on the question of eligibility for cenvat credit in respect of inputs used in repair and maintenance of the plant and machinery Honble Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd. vs. CCE, Raipur reported in 2010 (266) ELT 690 (Chhattisgarh), and Rajasthan High Court in the case of Hindustan Zinc Ltd. vs. Union of India reported in 2008 (220) ELT 517 have held that welding electrodes used for repair and maintenance of the plant and machinery are eligible for cenvat credit that with regard to eligibility for cenvat credit of rent-a-cab service for transportation of the employees, Honble Karnataka High Court in the case of CCE, Bangalore vs. Stanzen Toyotetsu India Private Ltd. reported in 2011 (23) STR 444 (Kar) and Honble Punjab & Haryana High Court in the case of CCE, Chandigarh vs. Federal Mogul Goetzes reported in 2011 TIOL 650 has held that the rent a cab service availed for transportation of the employees from residence to factory and back is an activity relating to business and eligible for cenvat credit; that the Commissioner (Appeals) in respect of welding electrodes has wrongly relied upon the Tribunals judgment in the case of SAIL vs. Collector reported in 2008 (222) ELT 233 and also Apex Court order in the case of same case reported in 2008 (229) ELT A127 (SC) dismissing the SLP as this judgment of the Tribunal and also the Apex Court order dismissing the SLP was discussed by Honble Chhattisgarh High Court in the case of Ambuja Cement Eastern Ltd. and High Court has observed that dismissal of SLP without giving any reason does not lay down any law and that in view of these submissions, the impugned order denying the cenvat credit in respect of welding electrodes and rent-a-cab services used for transportation of employees from residence to factory and back, is not sustainable. He also pleaded that in view of this there is no merit in the appeal of the Revenue.
4. Sh. R. K. Mathur, ld. DR while defended the impugned order upholding the cenvat credit, demand by reiterating the findings of Commissioner (Appeals). With regard to Revenues appeal he pleaded that availment of cenvat credit would attract penalty under Rule 15(1) of the Cenvat Credit Rules, 2004.
5. I have considered the submissions from both the sides and perused the record.
6. As regards to the first issue regarding eligibility for cenvat credit of welding electrodes used in repair and maintenance of plant and machinery the issue stands settled by the judgements of three High Courts judgments of Honble Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd. vs. CCE, Raipur reported in 2010 (266) ELT 690 (Chhattisgarh), judgment of Honble Rajasthan High Court in the case of Hindustan Zinc Ltd. vs. Union of India reported in 2008 (220) ELT 517 and judgment of Honble Karnataka High Court in the case of CCE, Bangalore-I vs. Alfred Herbert (India) Ltd. reported in 2010 (257) ELT 29. Though Honble High Court in a recent judgment in the case of Sree Rayalseema Hi-Strength Hypo Ltd. vs. CC&CE, Tirupati reported in 2012 (278) ELT 167 (A.P.) has taken a contrary view, in view of the judgement of the majority of the High Courts as mentioned above, I am of the view that it is that view which has to be followed. Moreover, the point as to whether activity of repair and maintenance of plant and machinery is distinct from manufacture is not relevant for deciding the eligibility for the cenvat credit of the inputs used for repair and maintenance, as for this purpose what is relevant is as to whether repair and maintenance has nexus with the manufacturing activity. Since without repair and maintenance, manufacturing operations, though theoretically possible, are not commercially feasible, the same has to be treated as an activity having nexus with manufacture and hence any inputs used for repair and maintenance would be eligible for cenvat credit.
7. As regards the eligibility for cenvat credit on rent-a-cab services used for transportation of the employees from residence to factory and back, this issue also stand decided in favour of the appellant by a series of judgments of Honble Karnataka High Court in the case of Stanzen Toyotetsu India Pvt. Ltd. (supra), CCE, Bangalore vs. Bell Ceramics Ltd. reported in 2012 (25) STR 428 and also by the judgment of Honble P&H High Court in the case of Federal Mogul Goetze (supra). Though the Commissioner (Appeals) has observed that the appellant have not produced any evidence that this service was availed for transportation of the employees, I find that this point was not raised in the show cause notice as the show cause notice was issued only on the basis that this service is not an input service. Even the original adjudicating authority while denying the cenvat credit did not raise the issue regarding the evidence with regard to the purpose for which this service was availed. Since it is settled law that adjudicating authority or the appellate authority cannot travel beyond the grounds taken in the show cause notice, the ground on which cenvat credit has been denied is not correct.
8. In view of the above discussion, while appeal filed by the appellant is allowed with consequential relief, the appeal filed by the Revenue is dismissed.
(Rakesh Kumar) Member (Technical) Pant 6