Custom, Excise & Service Tax Tribunal
Hindustan Petroleum Corporation Ltd vs Commissioner Of Central Excise ... on 6 November, 2023
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH
EXCISE APPEAL NO: 85051 OF 2014
[Arising out of Order-in-Original No: 17-18/RN/COMMNR/M-II/2013-14 dated
31st October 2013 passed by the Commissioner of Central Excise, Mumbai - II.]
Hindustan Petroleum Corporation Ltd
Refinery Division, B D Patil Road, Mahul
Mumbai - 400074 ... Appellant
versus
Commissioner of Central Excise
Mumbai - II
9th Floor, Piramal Chambers, Lalbaug, Parel
Mumbai - 400012 ...Respondent
APPEARANCE:
Ms Manasi Patil, Advocate for the appellant Shri Amrendra Kumar, Deputy Commissioner (AR) for the respondent CORAM:
HON'BLE MR C J MATHEW, MEMBER (TECHNICAL) HON'BLE MR AJAY SHARMA, MEMBER (JUDICIAL) FINAL ORDER NO: A / 87088/2023 DATE OF HEARING: 24/08/2023 DATE OF DECISION: 06/11/2023 PER: C J MATHEW The issue in this appeal of M/s Hindustan Petroleum E/85051/2014 2 Corporation Ltd, arising from the order1 of Commissioner of Central Excise, Mumbai - II in which credit of ₹ 3,27,01,642/-, for the period from 11th July 2013, and of ₹1,02,72,677/-, for the period from April 2012 to January 2013, proposed for recovery under rule 14 of CENVAT Credit Rules, 2004, along with applicable interest thereon, and imposition of penalty of like amount under rule 15 of CENVAT Credit Rules, 2004 in separate show cause notices were confirmed, challenges the finding of ineligibility of certain goods procured by them that were claimed to conform to 'inputs' in rule 2(k) of CENVAT Credit Rules, 2004. The claim of the appellant is that these goods were used in the setting up of 'lube oil upgradation plant', 'diesel hydro treatment plant' and similar projects which are of capital nature and, therefore, entitled to availment under CENVAT Credit Rules, 2004, of credit of duties paid on procurement.
2. According to Learned Counsel for the appellant, the adjudicating authority has relied upon the certifications and other documents presented to conclude that these were within the exclusion enumerated in Explanation 2 below rule 2(k) of CENVAT Credit Rules, 2004 as well as the amendment carried out thereafter with effect from 1st April 2011. It was further submitted that the adjudicating authority appeared to have been guided by the decision of the Larger Bench of the Tribunal in Vandana Global Ltd v. 1 [order-in-original no. 17-18/RN/COMMNR/M-II/2013-14 dated 31st October 2013] E/85051/2014 3 Commissioner of Central Excise & Customs, Raipur [2010 (253) ELT 440 (Tri.-LB)]. Reliance was placed on the decision of the Hon'ble Supreme Court in Commissioner of Central Excise, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd [2010 (255) ELT 481 (SC)] to contend that the decision of the Larger Bench relied upon in the adjudication order was no longer good law. It was further contended that 'welding electrodes' were also eligible goods as held by the Hon'ble High Court of Rajasthan in Hindustan Zinc Ltd v. Union of India [2008 (228) ELT 517 (Raj.)].
3. Learned Authorised Representative submitted that the decision of the Tribunal in Commissioner of Central Excise, Panchkula v. Saraswati Sugar Mills [2004 (178) ELT 804 (Tri.-Del.)] holding that steel structures fabricated in the factory are not covered under the definition of 'capital goods' had been affirmed by the Hon'ble Supreme Court in dismissing the appeal of the assessee. It is also submitted that 'inputs', as defined, permitted availment of credit of duties discharged on goods utilized for creation of capital goods at site that were intended to be used in manufacture and that the utilization by the appellant herein did not confirm thereof.
4. In terms of CENVAT Credit Rules, 2004, besides allowing the availment of duties discharged on procurement of 'capital goods' towards credit, other goods that finally found deployment in 'capital E/85051/2014 4 goods' were entitled for coverage as 'inputs' in accordance with rule 2(k) of CENVATA Credit Rules, 2004. The definition of 'inputs' underwent change twice. On the first occasion 'but shall not include cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bar (TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods'.
was incorporated vide notification no. 16/2009-CE dated 7th July 2009 in Explanation 2 below definition. Thereafter, with effect from 1st April 2011, in overhaul of the definition 'structures for support of capital goods' continued to exist and the intent with effect from July 2009 was held as excluding such availment. Peaking back in time, to the pre-amendment period, the adjudicating authority placed reliance on instruction dated 8th July 2010 of Central Board of Excise & Customs (CBEC) issued from F.No. 267/11/2010-CX intimating that the amendment of 2009 being clarificatory would have retrospective effect.
5. We find that adjudicating authority has placed reliance on the decision of the Larger Bench in re Vandana Global Ltd which is no longer good law. Furthermore, on facts, the adjudicating authority has relied upon the certifications issued by the project executors to conclude that the goods were nothing but 'structures for support of capital goods'; we do not find it tenable that an incorporation, by E/85051/2014 5 executive diktat, which has the effect of detriment to an assessee should be held to have retrospective effect unless the statute itself or the rules do provide for such. The clarification issued by the Central Board of Excise & Customs (CBEC), referred to in the impugned order is not an acceptable substituted authority. Accordingly, the restriction on inputs used in 'capital goods' would be effective only from 7th July 2009.
6. It appears from the records that there has been a summary finding by the adjudicating authority on the deployment of the impugned materials. For determining eligibility for availment of credit, it is important to note in context that these projects are 'turn- key projects' and that the utilization of such materials in the process of setting up such facilities on site would be intrinsic to the manufacture of capital goods. There was no evidence adduced to establish that these materials were used only for providing such structures for support of capital goods. It is also on record that the adjudicating authority was less than satisfied about the documents furnished in support of the claim of the appellants that these were used in the creation of capital goods on which appellant was not placed on the notice. In view of this deficiency in finding, it would be inappropriate for us to take a decision on the eligibility of each of the goods claimed to be so. It was for the adjudicating authority to examine the claim of the appellant in detail and, to the extent of E/85051/2014 6 inapplicability, give a clear finding on the actual usage owing to which it was not entitled. In order that the exercise may be undertaken, we set aside the impugned order and remand the matter back to the original authority for a fresh decision after affording an opportunity to the appellants herein to present their claim on factual as well as legal submissions.
(Order pronounced in the open court on 06/11/2023) (AJAY SHARMA) (C J MATHEW) Member (Judicial) Member (Technical) */as