Custom, Excise & Service Tax Tribunal
Srinathji Ispat Ltd vs Cce & S.T. Ghaziabad on 21 August, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL R.K. PURAM, WEST BLOCK NO. 2, NEW DELHI-110066 Single Member Date of hearing: 21/08/2015 Date of pronouncement: 7.09.2015 Appeal No. E/55361/2014-ST[SM] [Arising out of Order-in-Appeal No. GZB-EXCUS-000-APP-22-14-15 dated 10.07.2014 passed by Commissioner (Appeals), Customs, Central Excise & Service Tax, Ghaziabad] For Approval and Signature: Honble Smt. Sulekha Beevi C.S., Member (Judicial) 1. Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would 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 Department Authorities? Srinathji Ispat Ltd. Appellant Vs. CCE & S.T. Ghaziabad Respondent
Appearance: Shri Rajesh Chibber, Advocate for the appellant Shri Devender Singh, DR for the respondent Coram: Honble Smt. Sulekha Beevi CS, Member (Judicial) Final Order No. Per: Sulekha Beevi C.S. The appeal is filed challenging the impugned order which denied CENVAT Credit on inputs claimed to be used in the manufacture of capital goods.
1. Brief facts are as under:
1.1 The appellants are engaged in manufacture of steel ingots and castings and are having central excise registration. They are also availing CENVAT Credit on inputs and capital goods. During the course of audit, it was observed that during the period from April, 2008 to March, 2010 the appellants availed credit of Rs. 8,02,278/- on items like Shapes, Sections, Angles, Channel, TMT bars and welding electrodes as inputs. This was objected on the ground that these would not come under definition of inputs. Appellants explained that these items were used as inputs for manufacture of capital goods. The appellants availed credit on these items for Rs. 2,56,324/- for further period April, 2010 to July, 2011. A show cause notice was issued raising the above allegations which finalized in the order dated 7.11.2013 which confirmed the demand along with interest besides imposing penalty of equal amount. In appeal, the same was upheld. Being aggrieved the appellant is before the Tribunal.
1.2 The learned counsel explained that the appellant being manufacturer of Ingot /castings they require moulds (capital goods) for taking out the castings in desired shape and size. Sometimes, these moulds are procured from outside, but in certain case they fabricate/manufacture these moulds within their factory. The moulds get damaged during the course of use and require replacement. As they are made of steel, old and discarded moulds are used for melting purpose along with inputs. The appellants use Shape, Section, Channel and Angle for manufacture of such moulds. Again, TMT Bar is used for stirring of hot melting metal in the furnace. Since temperature is very high they get melted and become part of final product. The remaining of the stirring bar is joint to a new TMT Bar by welding and thus TMT bar is used for stirring in the process of manufacture. Welding electrodes were used for repair and maintenance of machinery. The appellant claimed credit on these items as inputs used for manufacture of capital goods Commissioner (Appeal) has allowed credit on welding electrodes. But denied credit on Shapes, Sections, Angles, Channels and TMT Bar. The learned counsel contended that the items would fall within the definition of inputs used for manufacturing capital goods and that therefore the credit was rightly availed, by the appellant.
2. Against this, the learned DR strenuously argued that the credit is inadmissible. He pointed out that in appellants own case for an earlier period (Srinathji Ispat Vs.CCE, Ghaziabad, 2010 (262) ELT 849 (Tri-Del) the Tribunal has denied credit on TMT Bar, Shapes, Sections, Angles and Channels. It is also submitted that though appellants contend that these items were used by them in manufacture of capital goods, the appellants have not been able to establish the manner in which these items were put into use.
3. Heard both sides. It is correct that the Tribunal in the decision cited above has taken the view that credit is not admissible on these items. But during that earlier period, the credit was claimed by the appellant on these items, claiming these items as capital goods. The appellant had used the very same items for the very same purpose, i.e., for making moulds. The appellant then claimed credit on these items as capital goods contending that moulds are specified in the definition of capital goods and that definition of capital goods also included parts, components and accessories used for capital goods. The Tribunal failed to appreciate this contention and disallowed the credit. Presently, the credit is claimed as inputs used for manufacturing capital goods and not as capital goods.
4. The term input has to be viewed in the light of the fact that the CENVAT Scheme is a beneficial legislation and should be given as wider meaning as possible. Inputs mean anything, i.e., put into the stream of manufacture. In the instant case, the contention of appellant is that the Sections, Shapes, Channels, Angles were used for fabrication of moulds. That moulds being specifically mentioned in the definition of capital goods, these items which were used for manufacture of moulds are eligible for credit. It is also the case of appellant that TMT Bar was used for stirring the metal and by its use becomes a constituent of the final product. The requirement of stirring rod in the process of manufacture is undeniable. To establish their contention, the appellants have produced a Chartered Engineer Certificate along with photographs showing the steps of manufacture/fabrication of moulds. This certificate explains the use of the impugned items in manufacture of moulds and also use of such moulds in the appellants industry.
5. The appellant has placed reliance on LSR Specialty Oils (P) ltd. Vs. CCE, Belapur 2014 (313) ELT 426 (Tri-Mum), CESTAT has observed therein that credit is admissible on MS Angle and HR Sheets used for fabrication of storage tanks, as storage tanks are specified as capital goods. Inputs used for manufacture of capital goods were held to be eligible for credit.
6. The department has no case that these items were used for construction, structure or for laying foundation. These were used for the manufacture/fabrication of moulds which are specified in the definition of capital goods. The facts of the above judgment relied by the ld. Counsel for appellant being similar to the instant case, I am of the view that the proposition laid in the above case is applicable to the instant case.
7. Further, as already stated moulds being specified as capital goods, the inputs used for manufacture of capital goods are eligible for credit.
8. With these observations, the impugned order is set aside and appeal is allowed with consequential relief, if any.
(Pronounced in the open court on 7.09.2015) (Sulekha Beevi C.S.) Member (Judicial) Ritu 5