Custom, Excise & Service Tax Tribunal
Sovereign Metals Ltd. vs Ahmedabad-Ii on 8 February, 2022
CUSTOMS,EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST ZONAL BENCH : AHMEDABAD
REGIONAL BENCH : COURT NO. 3
EXCISE Appeal No. 10591 of 2019-SM
[Arising out of Order-in-Original/Appeal No AHM-EXCUS-002-APP-111-18-19 dated
10.12.2018 passed by Commissioner ( Appeals ) Commissioner of Central Excise, Customs
and Service Tax-AHMEDABAD]
SOVEREIGN METALS LTD. ...Appellant
Gidc Naroda, Ahmedabad
Gujarat
382330
VERSUS
C.C.E.-AHMEDABAD-II ...Respondent
Custom House... First Floor, Old High Court Road, Navrangpura, Ahmedabad, Gujarat-380009 APPEARANCE:
Present For the Appellant : Shri P.P. Jadeja, Advocate Present For the Respondent : Shri G. Kirupanandan, Superintendent (AR) CORAM:
HON'BLE MEMBER (JUDICIAL), RAMESH NAIR FINAL ORDER NO. A/10227 / 2022 Date OF Hearing : 10/12/2021 Date of Decision: 08/03/2022 RAMESH NAIR The present appeal has been filed by the appellant M/s Sovereign Metals Ltd. (Formerly M/s. Edelweiss Metal Ltd.) against Order-in-Appeal No. AHM- EXCUS-002-APP-111-18-19 dated 30-10-2018. Three disputes in the present case regarding admissibility of the Cenvat credit. (1) Cenvat Credit on items viz.
a. Motorised Fire rated rolling shutter (Ch.73) b. GI Flush, GI Flush Door and Drop Seal (Ch.83) c. GI Flush partition, GI Flush Door & Drop Seal for Flush Door (Ch.76) d. Wooden Opaque Inpill (part of Megtek Door for Security Purpose) (Ch.83) 2 E/10591/2019-SM e. Main Safe Deposit vault Door (Ch.83) (2) Cenvat Credit of Service tax paid on services and availed prior to Central Excise Registration.
(3) Cenvat Credit of Service tax paid on services availed during the date of Central Excise Registration to date of plant ready for manufacturing process.
2. Shri P.P. Jadeja, learned counsel appearing on behalf of the appellant submits that Ld. Commissioner (Appeals) denied the cenvat credit of Rs. 8,43,479/-on goods Motorised Fire rated rolling shutter (Ch.73), GI Flush, GI Flush Door and Drop Seal (Ch.83), GI Flush partition, GI Flush Door & Drop Seal for Flush Door (Ch.76), Wooden Opaque Inpill (part of Megtek Door for Security Purpose) (Ch.83) Main Safe Deposit vault Door (Ch.83) on the ground that the all the goods has no relation directly or indirectly with the manufacture of final products and goods also not covered under the definition of Capital Goods. In the present matter Ld. Commissioner failed to take note that appellant are registered with the Directorate Industrial Safety & Health, Gujrat State and obtained a license to work as a factory subject to provisions of the Factories Act, 1948 and the Rules made thereunder, Gujrat Pollution Control Board, Department of Industrial Policy and Promotion, Goods & Service tax Act etc. and are required to discharge several mandatory obligations. In view of the requirement of Section 38 of the Factories Act and considering the risk involved in the business of manufacture of Gold and Silver bars, elaborate Safety and Security arrangement from theft or fire, have been made for the safeguard of Staff, inputs and Goods manufactured and the government revenue involved. All the above items are used in the factory of manufacturer of the final products for the purpose of Safety & Security of Goods, from the theft 3 E/10591/2019-SM or fire. Clearly having relationship with the manufacture of the final products and fall under the definition of inputs. In support of their contention, he relies upon the following judgments:
(i) 2011(21) STR 8 (Guj) CCE Ahmedabad -I Vs Ferromatik Milacron India Ltd.
(ii) 2017 (3) GSTL 24 (Mad.) Sri Rama Vilas Services Ltd.
(iii) 2003 (158) ELT 120 (SC) -CCE Vs Tata Engineering & Locomotives Co.
Ltd.
(iv) 2017(50) STR 88 (Tri.-Hyd.) Hindustan Coca Cola Beverages Pvt. Ltd. Vs CCE, Hyderabad -I,
(v) 2017(50)STR 294 (Tri. Chennai) Indian Oil Corporation Ltd. Vs. CCE, Chennai -I
(vi) 2017(52) STR49 (Tri. Chennai) Delhi TVS Diesel Systems Ltd. Vs CCE Chennai -IV
(vii) 2017(52) STR 56 (Tri.All) Orient Bell Ltd. Vs CCE, Noida
(viii) 2014 (301) ELT 592 (Tri. Del) M/s Steel Authority of India Ltd. Vs. CCE Raipur 2.1 He further submit that, CBEC Circular No. 943/04/2011-CX dtd. 29.04.2011, the Board has clarified that goods such as furniture and stationery used in an office within the factory are goods used in the factory and is used in relation to the manufacturing business and hence the credit of same is allowed. In view of this Appellant also eligible for Cenvat Credit on above goods.
4 E/10591/2019-SM 2.2 As regard the second disputed cenvat credit issue, he submits that they have availed the Cenvat Credit of Rs. 5,93,263/- on services which were used/consumed before they had applied for Central Excise Registration. The Appellant had taken the Cenvat Credit after taking registration. The registration and eligibility of Cenvat Credit are independent issues and therefore Cenvat Credit of Service tax paid on input service prior to registration can be availed. The Appellant has correctly availed the Cenvat Credit on input services.
2.3 As regard the third disputed cenvat credit issue, he submits that they have availed the Cenvat Credit of Rs. 17,59,134/- on services which were received after taking registration on 28.02.2014 but before the plant was ready for manufacturing process on 27.08.2014. There is nothing in Cenvat Credit Rules 2004, restricting the taking of Cenvat credit on services received after registration but before the plant is ready for manufacturing; the services on which cenvat credit is taken were in the nature of legal & Professional - RCM, Mgt. Consultant- RCM, Manpower Supply -RCM, Audit, Consultancy, Security, Official travels etc. and services related to the manufacture of final products. They have correctly taken the cenvat Credit in the impugned matter.
2.4 He further argued that the impugned OIA confirming demand, invoking the larger period is bad in law in as such as the appellant has not concealed any facts from the department. The Appellant has taken the Cenvat Credit bonafidely and has disclosed/shown at the appropriate place in the online return filed. He relies upon the following judgments:
(i) 2014(307)ELT15(Guj) - Dynamic Industries Ltd. Vs. Commissioner 5 E/10591/2019-SM
(ii) 2015(322) ELT 410-SC -CCE Vs. Ranka Wires
(iii) 2014(34)STR 276(Tri. Del.) -Hi-Tech Power & Steel Ltd. Vs. CCE, Raipur
(iv) Final Order No. A/10021/2018 dtd. 04.01.2018 passed by the CESTAT, Ahmedabad in the matter of Grindwell Norton Ltd. Vs. CST- Vadodara-I,
(v) 2017(355) ELT 45(Mad.) -Micro Chem Products (India) Pvt. Ltd. Vs CCE
(vi) 2017(4) GSTL 401 (Tri. Hyd.) - Musaddilal Projects Ltd. Vs. CCE, Hydrabad-I,
(vii) 2017(358) ELT 101 (MP) - CCE Indore Vs ZYG Pharma Pvt. Ltd.
3. Shri G. Kirupanandan, learned Superintendent (Authorised Representative) appearing for the revenue reiterates the findings in the impugned order.
4. I have considered the submissions made by both the sides and perused the records. The issue to be considered by me is that whether the appellant is entitled for CENVAT credit on inputs namely:
• Motorised Fire rated rolling shutter (Ch.73) • GI Flush, GI Flush Door and Drop Seal (Ch.83) • GI Flush partition, GI Flush Door & Drop Seal for Flush Door (Ch.76) • Wooden Opaque Inpill (part of Megtek Door for Security Purpose) (Ch.83) • Main Safe Deposit vault Door (Ch.83) Secondly, whether the appellant is entitled for CENVAT credit of service tax paid on services when availed prior to obtaining Central Excise Registration.
6 E/10591/2019-SM Thirdly, whether the appellant is entitled for CENVAT credit on service tax paid on services availed during the date of Central Excise Registration to date of plant ready for manufacturing process. As regard the CENVAT credit on goods described above I find that these goods were used in the appellant's factory which is engaged in the manufacture of gold. The Adjudicating Authority has denied the credit on the ground that these goods such as shutter, door, flush door, etc are related to building. Therefore, the same is neither capital goods nor input. Whether the goods is input or otherwise it has to be decided on the basis of type of industry and the product manufactured therein. In the present case, the manufacturer is engaged in the manufacture of gold for which the safety of gold is a vital part of the overall manufacturing and trading thereof. I find that all these goods even though are forming part of building but these are all specialized goods which are normally not installed in normal buildings. In the present case, product being gold, the safety of gold is very important. Accordingly, all these goods are specialized items which are installed for the storage and safety of the final product i.e. Gold. As per the definition of input, input means goods which is used in or in relation to the manufacture of final product, whether directly or indirectly. Therefore, goods which is used even not in the manufacture directly but even if it is used in relation to the manufacture and indirectly, the said goods qualify as inputs. Therefore, in the present case all the goods which are specialized goods used for storage and safety of the gold, in my considered view, these are inputs used in relation to the manufacture of the final product i.e. gold indirectly. Identical issue has been considered by this Tribunal in the various judgments where in the goods was neither the goods were capital goods nor these directly used in manufacture but since it is essential in relation to the manufacture, 7 E/10591/2019-SM the CENVAT credit on those goods was allowed considering it as inputs.
Some of the judgments are cited below:
(1) 2016 (343) ELT 805 (Tri-Del.) Steel Authority of India Ltd. vs CCE (2) 2017 (349) ELT 133 (Mad.)-CCE, Salem vs Madras Alluminium Co.
Ltd.
(3) 2017 (349) ELT 316 (Tri-Del.) Hindustan Zinc Ltd. vs CCE, Jaipur (4) 2020 (38) GSTL 171 (Chattsgarh)-Pr Commr vs Steel Authority of India Ltd.
(5) 2015 (323) ELT 220 (SC)- CCE, Hyundai Unitech Electrical Transmission Ltd.
In view of the above judgments and my observation I am of the considered view that all these goods are inputs and CENVAT credit is admissible.
4.1 As regard the issue that whether appellant is entitled for CENVAT credit in respect of Service Tax paid on services prior to obtaining the Central Excise registration and also on the issue that services used during the date of Central Excise Registration till the date plant got ready for manufacturing process. I am of the view that the Central Excise registration is not required for availing the CENVAT credit. The CENVAT credit eligibility is on the condition that the services were received by the assessee, the same was used in or in relation to the manufacture of final product and the final product has been cleared on payment of duty. Therefore, the eligibility of CENVAT credit cannot be related to the Central Excise registration. This Tribunal considering this issue whether the CENVAT credit is admissible prior to obtaining Central Excise registration has been considered in the following decisions:
8 E/10591/2019-SM (1) Portal India Wireless Solutions P. Ltd. vs CST 2012 (27) STR 134 (Kar.) (2) Well Known Polyesters Ltd. vs CCE, Vapi 2011 (267) ELT 221 (Tri.-
Ahmd) (3) Vamona Developers PVt Ltd. 2016 (42) STR 277 (Tri-Mumbai) From the above judgments it can be seen that the Tribunal even for the services received prior to Central Excise registration allowed the CENVAT credit on the input services. Therefore, this issue is no longer under dispute. 4.2 The appellant has also raised the issue of limitation and cited various judgments. From the facts and judgments cited by the appellant though the appellant made out prima facie strong case on limitation but since I have decided the matter on merit itself as discussed above, I am not inclined to give any conclusive decision on limitation.
5. As per my above discussions and findings, the impugned order is not sustainable, hence, the same is set aside. The appeal is allowed with consequential reliefs.
(Pronounced in the open court on 08.03.2022) (RAMESH NAIR) MEMBER (JUDICIAL) Diksha