Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise & ... vs M/S. Venkatesh Iron & Alloy Ltd on 27 February, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No.E/76293/2014, CO-75234/2018
(Arising out of Order-in-Appeal No.47/RAN/2014 dated 19.06.2014 passed by the Commissioner (Appeals),Central Excise & Service Tax, Ranchi)
Commissioner of Central Excise & Service Tax, Ranchi
Applicant (s)/Appellant (s)
Vs.
M/s. Venkatesh Iron & Alloy Ltd.
Respondent (s)
Appearance:
Shri D.Haldar, AC(AR) for the for the Appellant/Applicant (s) Shri A.K.Agarwal, C.A. for Respondent (s) CORAM:
Honble Shri P.K.Choudhary, Member (Judicial) Date of Hearing:- 27.02.2018 Date of pronouncement :15.03.2018 ORDER NO.FO/75313/2018 Per Shri P.K.Choudhary
1. The respondents are engaged in the manufacture of sponge iron falling under Chapter 72 of the Central Excise Tariff Act (CETA), 1985. Show Cause Notice was issued alleging contravention of the provision of Cenvat Credit Rules, 2004 in as much as they availed and utilized cenvat credit on M.S.beams, M.S.Channels, M.S.Angles, M.S.Bars, M.S.Joist, H.R.Plate, H.R.Coil, Plate, Chequered Plate, Chequered Coil etc. classifiable under Chapter 72 and 73 and Welding Electrodes falling under Chapter 83 of the CETA,1985, claiming them as capital goods and inputs during the period 2007-08 to 2010-11. The Executing Authority confirmed the demand of Rs.41,10,313/- on the assessee and also imposed equal penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. Penalty of equal amount was also imposed on the Director of the assessee company. On appeal the Commissioner (Appeals) allowed the appeal filed by the assessee. Hence, the Revenue is in appeal before this Tribunal.
2. Ld. A.R. appearing on behalf of the Revenue reiterated the grounds of appeal. Revenue in their grounds of appeal stated that no declaration was given by the assessee for manufacture of capital goods and their clearance without payment of duty for captive consumption under Notification No.67/95-CE dated 16.03.95. It has also been stated that the assessee had deliberately taken/utilized wrong cenvat credit on disputed items and suppressed the fact of availment of credit on such ineligible goods. It has also cited various decisions.
3. Ld. Counsel for the assessee relied upon the following decisions:
i) Mundra Ports & Special Economic Zone Ltd. vs. CCE & Cus [2015(39)STR 726 (Guj.)]
ii) M/s. Singhal Enterprises Pvt. Ltd. vs. C.Cus & C.Ex, Raipur [2016(9)TMI 682, Cestat, New Delhi)]
iii) Comm. Of C.Ex, Jaipur vs. M/s. Rajasthan Spinning & Weaving Mills Ltd. [2010(7) TMI 12 Supreme Court of India.
4. On perusal of the impugned order I find that the Adjudicating Authority at one hand is accepting that as per the Chartered Engineers Certificate submitted by the assessee the inputs were consumed in structural support and fabrication, in setting up of kiln, installation of conveyor systems and also for Hooper and storage tank. But simultaneously, denying the cenvat credit on the said items by treating them as used for making support structure. It is seen from the impugned order that the said items were used for making various machines /machines parts and accessories thereof such as Kiln, conveyor, pollution control equipments, Hooper. Revenue had not seriously contested the use of items in their appeals.
5. In the case of Singhal Enterprises Pvt. Ltd. vs. C.Cus & C.Ex, Raipur (Supra) the Tribunal allowed the appeal filed by the assessee. The relevant portion of the said judgment is reproduced below:
12.?We have gone through the judgment of the Honble High Court of Allahabad cited by the Revenue. We find that the Honble High Court has considered the claim of Welding Electrodes under the definition of Capital Goods under Rule 2(a) of the Cenvat Credit Rules, 2004 and have come to the conclusion that the credit will not be allowable under this Rule. However, we find that the credit of duty paid on Welding Electrodes has been held allowable by several decisions of this Tribunal and hence the issue is no more res integra. We also find that several High Courts have also allowed such credit considering the same as allowable within the definition of Input under the Cenvat Credit Rules. One such reference can be made to the decision of the Honble High Court of Chhattisgarh in the case of Ambuja Cements Eastern Ltd. v. Commissioner of Central Excise, Raipur, 2010 (256) E.L.T. 690 (Chhattisgarh), wherein welding electrodes used for repair and maintenance purpose were also held to be cenvatable. Similarly, in the case of Hindustan Zinc Limited v. Union of India, 2008 (228) E.L.T. 517 (Raj.), the Honble High Court of Rajasthan allowed the Cenvat credit on the welding electrodes. By following said decision, we hold that the appellants are entitled to the credit on welding electrodes considering them as Inputs.
13.?Now we turn to the question, whether credit is admissible on various structural steel items, such as, MS Angles, Sections, Channels, TMT Bar, etc., which have been used by the appellants in the fabrication of support structures on which various capital goods are placed? The same stands denied by the lower authority. The learned DR has sought disallowance of the same by citing the decision of the Larger Bench in the case of Vandana Global Ltd. (supra) and other judgments. Further, he has brought to our notice and emphasized the amendment carried out in Explanation-II to Rule 2(a) which defines the term Input w.e.f. 7-7-2009. It has further been pleaded that the Cenvat credit claimed for the period prior to this will be covered within the decision of the Larger Bench in the case of Vandana Global Ltd. (supra).
14.?The Larger Bench decision in Vandana Global Ltd.s case (supra) laid down that even if the iron and articles were used as supporting structures, they would not be eligible for the credit. Considering the amendment made w.e.f. 7-7-2009 as a clarification amendment and hence to be considered retrospectively. However, we find that the said decision of the Larger Bench was considered by the Honble Gujarat High Court in the case of Mundra Ports & Special Economic Zone Ltd., 2015 (04) LCX0197 = 2015 (39) S.T.R. 726 (Guj.), wherein it was observed that the amendment made on 7-7-2009 cannot be held to be clarificatory and as such would be applicable only prospectively.
15.?We find that the controversy can be laid to rest by making a reference to the decision of the Apex Court in the case of CCE, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd., 2010 (255) E.L.T. 481 (S.C.), wherein the Honble Supreme Court has considered an identical issue of steel plates and MS channels used in the fabrication of chimney for diesel generating set. The credit stands allowed in the light of Rule 57Q of the erstwhile Central Excise Rules, 1944. In the said judgment, the Apex Court has referred to the user test evolved by the Apex Court in the case of CCE, Coimbatore v. Jawahar Mills Ltd., 2001 (132) E.L.T. 3 (S.C.), which is required to be satisfied to find out whether or not particular goods could be said to be capital goods. When we apply the user test to the case in hand, we find that the structural steel items have been used for the fabrication of support structures for capital goods. The appellants have argued that the various capital goods, such as, kiln, material handling conveyor system, furnace, etc. cannot be suspended in mid-air. They will need to be suitably supported to facilitate smooth functioning of such machines. It is obvious that the structural items have been suitably worked upon for this purpose. Accordingly, the goods fabricated, using such structurals, will have to be considered as parts of the relevant machines. The definition of Capital Goods includes, components, spares and accessories of such capital goods. Accordingly, applying the User Test to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of Capital Goods as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat credit.
6. In view of the above decision of the Tribunal the appeal filed by the Revenue is dismissed. Cross objection is also disposed of.
( Pronounced in the open court on 15.03.2018) S/d.
(P.K.Choudhary) MEMBER (JUDICIAL) SS 2 Appeal No.E/76293/2014