Custom, Excise & Service Tax Tribunal
M/S. Dalmia Cement (Bharat) Ltd vs Cce, Trichy on 19 August, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal Nos. E/505, 506 & 526/2012
(Arising out of Order-in-Appeal Nos. 216 & 217/2012-TRY dated 31.8.2012 and Order-in-Appeal No. 225/2012 dated 25.9.2012 both passed by the Commissioner of Central Excise (Appeals), Trichy)
M/s. Dalmia Cement (Bharat) Ltd. Appellant
Vs.
CCE, Trichy Respondent
Appearance Shri S. Gokarnesan, Advocate the Appellant Shri L. Paneer Selvam, AC (AR), for the Respondent CORAM HONBLE SHRI R. PERIASAMI, TECHNICAL MEMBER Date of Hearing / Decision: 19.8.2015 Final Order No. 40995-40997 / 2015 Appeal Nos. E/505 & 506/2012 are arising out of Order-in-Appeal dated 31.8.2012 and Appeal No. E/526/2012 is arising out of Order-in-Appeal dated 25.9.2012. As the issue involved in all these appeals are common they are taken up together for disposal.
2. The issue relates to eligibility of CENVAT credit on steel plates, angles, channels, parts, components and accessories of capital goods, welding electrodes and storage rack. The adjudicating authority disallowed the credit and also imposed penalty under Rule 15(1) of CENVAT Credit Rules, 2004. On appeal, Commissioner (Appeals) upheld the adjudication order and rejected the appeals. Hence the present appeals.
3. The learned counsel appearing for the appellants submitted a written synopsis and explained each of the products i.e. steel plates, MS Flats, angles, welding electrodes are used for fabrication of RAW Mill Hooper. Similarly, welding electrodes are used both for fabrication of parts, components for cement machineries and for repair of machineries. Storage rack is used to store inputs, parts, components of machineries. He drew attention to stay order dated 30.1.2013 passed by the Tribunal in these appeals, whereby the Tribunal after giving detail finding on the usages granted waiver of predeposit. He submits that after 7.7.2009 they are not taking any CENVAT credit of inputs used for construction of plant and immovable property. He referred to the definition of input under CENVAT Credit Rules, 2004 prior to the amendment as well after 1.4.2011. He further submits that the Bangalore Bench of this Tribunal, in the appellants own case vide Final Order dated 23.6.2015, allowed the credit on welding electrodes, MS angles, etc. He relied on the following decisions:-
(a) Union of India Vs. Hindustan Zinc Ltd. 2007 (214) ELT A115 (SC)
(b) CCE Vs. CESTAT, Chennai 2014 (309) ELT 71 (Mad.)
(c) CCE Vs. India Cements Ltd. 2009 (238) ELT 411 (Mad.)
(d) Banco Products (India) Ltd. Vs. CCE 2009 (235) ELT 636 (Tri. LB) He submits that the entire period of dispute is covered under the amended definition of CENVAT Credit Rules, 2004 which covers all the items except the inclusions. He also relied n the Boards Circular dated 2.12.1996 wherein parts and components irrespective of any chapter are eligible for capital goods credit.
4. On the other hand, the learned AR for Revenue reiterated the findings of the authorities below and submits that as per the definition prior to 31.3.2011, MS sheets, flats, welding electrodes, CTD Bars are not eligible for input credit and these inputs are not used in or in relation to manufacture of the final product. He relied on the decision of the Larger Bench of the Tribunal in the cases of Jaypee Rewa Plant Vs. CCE, Raipur 2003 (159) ELT 553 (Tri. LB) and Vandana Global Ltd. Vs. CCE, Raipur 2010 (253) ELT 440 (Tri. LB) for denial of credit on welding electrodes and for steel structures. He also relied on the decision of the Honble Supreme Court in the case of Maruti Suzuki Ltd. Vs. CCE 2009 (240) ELT 641 (SC).
5. The learned counsel countered the arguments that Jaypee Rewa Plant (supra) and Vandana Global (supra) have been overruled by various High Courts in Gujarat Ambuja Cements.
6. After hearing both sides and on perusal of the records, I find that the short issue involved is admissibility of credit on steel plates, channels, welding electrodes, storage racks etc. On perusal of the documents, the appellants have taken CENVAT credit on the parts and accessories of capital goods for the period from March 2010 to June 2010 in respect of Appeal Nos. E/505 & 506/2012 and for July 2010 to December 2010 in respect of Appeal No.E/526/2012. As seen from the worksheet enclosed to the paper book at page 181, I find that each and every item and their quantity, usage has been listed out. The steel plates, angles are used for fabrication of raw mill hooper, fabrication of belt conveyor systems, fabrication of transfer tower, parts of boiler, fabrication of grating material for belt conveyor bottom etc. Further, as per the capital goods are concerned, they are used as parts and components. I find that the Bangalore Bench of this Tribunal vide Final Order No. 21413 & 21414/2015 dated 23.6.2015, in the appellants own case, allowed the credit on these items. The Honble Supreme Court in the case of Union of India Vs. Hindustan Zinc Ltd. (supra) has allowed credit on steel sheets used for manufacture of components, parts and accessories. The Honble Madras High Court in the case of CCE Vs. CESTAT (supra) dismissed the Revenues appeal and upheld the order passed by the Tribunal dated 18.1.2005. The relevant paragraphs are reproduced as under:-
16.As far as item Nos. (v), (vi), (vii), (viii), (ix)? and (x) MS Plates various sizes, Oxygen Gas, Acctyne gas, MS Welding electrodes, Aluminium Welding wire and CI Welding wire are concerned, these inputs were under the consideration of Tribunals decision in the assessees own case reported in 2001 (136) E.L.T. 182 (Tribunal-Chennai) (MALCO v. CCE, Coimbatore) which is subsequently confirmed by the Division Bench of this court in the case reported in 2008 (226) E.L.T. 342 (Madras), CCE v. Madras Aluminium Ltd. Therefore, these items are also eligible for credit.
17.As far as item no. (xi) PVC Pipes is concerned, in the case of Vardhman Acrylics Ltd. v. Commissioner of C. Ex. & Cus. reported in 2006 (194) E.L.T. 85 (Tri.-Mumbai) and CCE, Chennai v. PepsiCo India Holding Ltd. reported in 2001 (130) E.L.T. 193, it is held that this item is also eligible for credit and therefore, this item is also eligible for credit.
18. Rule 57 of the Central Excise Rules deals with credit of duty paid on the excisable goods used as inputs. Rule 57Q relates to credit of duty paid on capital goods used by the manufacturer of specified goods. The Tribunal had relied on assessees own case reported in 2001 (136) E.L.T. 182 (Tribunal-Chennai), (MALCO v. CCE, Coimbatore). The said order deals only with 57A of the Central Excise Rules, where many of the inputs were considered for credit. Therefore, the Tribunal is correct in holding that the inputs are used directly or indirectly for the manufacture of final product as per Rule 57A of the Central Excise Rules during the relevant period.
19. Therefore, we are of the considered view that the assessee is entitled for credit for the above said items and the substantial questions of law are answered in favour of the assessee.
20.In the result, appeal is dismissed and the final order passed by the file of the Customs, Excise and Service Tax Appellate Tribunal, Southern Regional Branch, Chennai in Final Order No. 71/2006, dated 18-1-2005 is confirmed. No costs.
7. The ratio of the Honble Madras High Court squarely applies to the present case and the decisions relied on by the learned AR for Revenue are not applicable to the present case. Respectfully following the judgment of the Honble Supreme Court and the Honble High Court of Madras, I hold that the appellants are eligible for CENVAT credit on MS Steel plates, channels, angles, welding electrodes, storage racks which are used for manufacture of various capital goods and also parts and components which are used in the capital goods. Accordingly, the impugned orders are set aside and the appeals are allowed.
(Dictated and pronounced in open court) (R. PERIASAMI) Technical Member Rex 5