Custom, Excise & Service Tax Tribunal
Commissioner, Central ... vs M/S. Monnet Sugar Ltd on 2 December, 2010
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066. BENCH-,,,,,SM Date of Hearing/Decision:02.12.2010 Excise Appeal No.E/279/09 [Arising out of Order-in-Appeal No.194/CE/MRT-I/2008 dated 31.10.2008 passed by the Commissioner (Appeals), Central Excise Meerut]. For approval and signature: Honble Mr.M.Veeraiyan, 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? Commissioner, Central Excise,Meerut-I Appellant Vs. M/s. Monnet Sugar Ltd. Respondent
Present for the Appellant :Shri.K.K. Gupta, Advocate Present for the Respondent:Shri.Krishna Pratap Singh, SDR Coram: Honble Mr. M. Veeaiyan, Member (Technical) ORDER NO. _______________ DATED:02.12.2010 PER: M. VEEAIYAN
This is an appeal against the order of the Commissioner (Appeals). No.194/CE/MRT-I/2008 dated 31.10.2008.
2. Heard both sides.
3. The appellants have been denied Cenvat Credit on certain items claimed as inputs and certain other items claimed by them as capital goods and Original Authority confirmed demand of R.3,86,288/- alongwith interest and imposed equal amount of penalty. Order of the Original Authority stands upheld by the Commissioner (Appeals).
4. Ld. Advocate for the appellants, at the outset submits that due to smallness of amounts they are not contesting the demand relating to M. Seal, Chain, Fire creat, Electric goods and cables. Total amount involved is Rs.17,217/- and interest there of. However, he is contesting penalty imposed. Drawing my attention to the detailed use of the inputs and the items claimed as capital goods, he submits that there is no justification for denial of credit in respect of other items. He particularly draws my attention that the Original Authority after taking note of the uses of the inputs merely stated that he was not satisfied with the use explained by the party and denied the credit. As regards denial of credit relating to goods claimed as capital goods, he proceeded under the assumption that even components and accessories should fall under specified Chapter heading 84 and 85 which is erroneous.
5. Ld. SDR reiterates the findings and reasoning of the Commissioner (Appeals). He also submits that the appellants have not produced any evidence in the form of technical opinion regarding the use of the inputs.
6. I have carefully considered the submissions from both sides and perused the records. The use of the inputs as recorded by the Original Authority is as follows:-
(i) Welding Electrodes:-
Welding Electrodes are used for proper upkeep and maintenance of plant and machinery, which is essential for the manufacture of sugar and molasses. There are used in Mill House, Boiling House, Boiler, Fiberizer, Cane Cutting Knives etc.
(ii) DRIMAX [TH.38.09] Drimax is a chemical used in sugar manufacture and is used in the Boiling House (Line). This reduces the viscosity of masscuit which results in increased production of sugar.
(iii) MAGNAFLOK (TH.38.09) This is added in the production line. It helps to accelerate settlingrate of non-sugar participants from sugar, which result in removal of non-sugar participants front the sugar.
(iv) D.P. LINER [L D P Liner] TH. 39.23 This is used for lining of Gunny Bags after packing of sugar in such bags. This is a packing material directly used for packing of sugar.
(v) RENICIDE TH. 38.08 This is used during the process of milling of the cane to prevent bacterial growth during this process. This helps in removal of bacteria, fungus and dextran etc., from the sugarcane juice and adds to the output of sugar.
7. Use of these items as mentioned above, clearly indicates that they are to be considered as inputs. In respect of welding electrodes as pointed out by the ld. Advocate, the welding electrodes used in repair and maintenance has been treated as inputs eligible for cenvat credit in terms of judgement of the Honble High Court of Chhattisgarh in the case of Ambuja Cements Eastern Ltd. vs. CCE, Raipur reported in 2010-TIOL-309-HC-Chhattisgarh-CX.
8. The use of other items, namely, Steel Rope, Chain & Spares, Spares of Boiler, Spares of Machines & Sprocket as recorded in the Order of the Original Authority is reproduced below:-
(i) STEEL ROPE/WIRE ROPE (T.H. 73.12) Wire rope is a part of cane unloader installed in the factory. Cane unloader is a material handling equipment and essential for the manufacture of sugar. This is used for unloading of Sugar Cane from the truck. Cane unloader being material handling equipment, is duly covered under T.H. No.8428 of Central Excise Tariff Act. Wire rope/Steel rope being part of Cane Unloader covered under Chapter 84 is duly covered under the definition of capital goods as Components, spares and accessories of goods specified at (i) under clause (iii).
(ii) CHAIN & SPARES (T.H. 7315 SIC. 7515 as mentioned in the Show Cause Notice. These Chains and Spares are parts/components of Cane Carrier. Cane Carrier is a material handling system duly covered under T.H. No.8428.20 of Central Excise Tariff Act. Further, Chain & Spares being components/parts of Conveyor system (cane carrier) falling under Ch. 84 of the Central Excise Tariff Act, the same are duly covered within the definition of Capital Goods as Components, spares and accessories of goods specified at (i) under clause (iii).
(iii) SPARES OF BOILER (T.H. 6901/6807) Boiler is an important machinery in Sugar Plant. Boiler falls under T.H. 8402 of the Central Excise Tariff Act. The goods in question have been used for insulation of the boiler. Therefore, the same being parts/components/ accessories of Boiler falling under specified Chapter 84, are duly covered within the definition of Capital Goods, as in case of (i) & (ii) above.
(iv) SPARES OF MACHINES C.S. HUB for Conveyer Idler Roller C.S. Brake Drum Puller for Cane Unloader C & CT Wheel for Cane Unloader.
The description of the above items as mentioned in the invoice No.170 dated 25.08.2005 of M/s Prem Chand Industries, Ghaziabad. The description on invoice itself shows that these are parts of Cane Unloader,Idler Roller/Bugasse Belt Conveyor.
(v) SPROCKET TH. 8483.90 In the invoice in question No.029 dated 18.09.2006 of M/s Gear-N-Gear, Ghaziabad, Tariff Heading has been mentioned as 8384.90 instead of correct T.H. No.8483.90 apparently due to clerical error. SPROCKET is specifically mentioned under TH No.8483.90. Further, there is no tariff heading 8384.90 in the Central Excise Tariff. Being covered under Ch.84 of the Central Excise Tariff, these goods are duly covered in the definition of capital goods under Rule 2 (a) of CC Rules.
9. The ld. Advocate for the appellants drew my attention to the clarification given by the CBEC as contained in the manual relating to scope of the Definition of capital goods which reads as under:-
2. Definitions.
2.1.1 Certain definistions have been incorporated in rule 2 of the Credit Rules itself. The definition of capital goods is comprehensive. It includes components, spares and accessories as also other capital goods like moulds and dies, refractories and refractory materials, etc. It has been clarified that the components, spares and accessories may fall under any Chapter but they should be components, spares or accessories of capital goods. Storage tanks were added to the list of capital goods w.e.f. 1.3.2001.
2.1.2 Credit of duty paid on motor vehicles has been allowed for the services like Tour operators where it is a part of the process of providing output services.
10. While the capital goods are required to fall under specified Chapter Headings 84 and 85, there is no such restriction for spares, accessories of such capital goods to be considered as capital goods. It has not been disputed that the items claimed were used in Cane Loader or as spares of boiler and machines.
11. In view of the above, the denial of credit on these items is not justified.
12. In the light of the above, the appeal is disposed of as follows:-
a) The demand to the extend of Rs.17,270/- alongwith interest is upheld as uncontested.
b) Rest of the demand amounting to Rs.3,69,018/- is set aside.
c) The entire penalty is set aside.
(Dictated and pronounced in the open Court) (M. VEEAIYAN) MEMBER (TECHNICAL) Anitha