Custom, Excise & Service Tax Tribunal
M/S. Dhampur Sugar Mills Ltd vs C.C.E. Meerut-Ii on 28 January, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Miscellaneous Application No. E/55357 & 55358/2014
Excise Appeal No. E/2015-2017/2009 -Ex[DB]
[Arising out of Order-In-Appeal No. 151-154-CE/MRT-II/2009 dated: 31.03.2009 bearing C. No. 578-CE/Appl/MRT-II/08/dated 31.03.2009 passed by North U.P. Commissionerate, Meerut-II]
For approval and signature:
Hon'ble Mr. Rakesh Kumar, Member (Technical)
Hon'ble Mr. S.K. Mohanty, Member (Judicial)
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?
M/s. Dhampur Sugar Mills Ltd. ...Appellant
Vs.
C.C.E. Meerut-II Respondent
Appearance:
Mr. Aalok Arora, Advocate for the Appellants Mr. R. K. Grover, DR for the Respondent CORAM:
Hon'ble Mr. Rakesh Kumar, Member (Technical) Hon'ble Mr. S.K. Mohanty, Member (Judicial) Date of Hearing/decision.28.01.2015 FINAL ORDER NO. 50306-50308 /2015-Ex(Br) Per Rakesh Kumar (for the Bench):
The appellant are manufacturers of Sugar, molasses and other chemicals chargeable to central excise duty. The period of dispute in appeal No. E/2015/09 is from March 1995 to August 1995 and January 1997 to March 1997. The period of dispute in appeal No. E/2016/09 is form September 1995 to June 1996 and Period of dispute in appeal No. E/2017/09 is July 1995. The appellant, during this period were availing Modvat Credit of Central Excise duty paid on inputs and capital goods as per the provisions of Central Excise Rules, 1944. In appeal No. E/2015/09, the dispute is about admissibility for cenvat credit in respect of angles, joists, shapes, sections, HR Plates, HR coils, GP Sheets, SS Plates, HR Sheets, CI Frames, MS Plates for base frames, Black Steel tubes, ERW Steel tubes, MS Channels, MS Pumps and nuts, Nickel Screen etc., which, according to the appellant, had been used as component to various sugar mills machinery as well as supporting structure for machinery. Nickel Screen is used in centrifugal machine as its parts. While Modvat credit in respect of nickel screen was disallowed on the ground that the appellant did not filed declaration as required under Rules, the Modvat credit in respect of the other items was disallowed on the ground that the items are neither covered by the definition of input nor are covered by the definition of capital goods. The total cenvat credit disallowed in this appeal is Rs. 18,88,658/- and beside this penalty of Rs. 15lakh has been imposed. In appeal No. E/2106/09, the dispute is in respect of admissibility for modvat credit of various items of iron and steel of MS Angles, Channels, Joists shapes and sections, HR Plates, HR Coils etc., which according to the appellant had been used either as parts of the machinery or as supporting structure for machinery. The credit of Rs. 25,24,741/- for the period from September, 1995 to June, 1996 in respect of these items was disallowed and its demand was confirmed on the ground that these items are neither covered by the definition of input nor covered by the definition of capital gods, beside this penalty of Rs. 10 Lakh has been imposed.
1.1 In appeal No. E/2017/09, the period of dispute is July 1995 and the disputed items for the cenvat credit are the steel items mentioned above, copper winding wire and also gunny bags for declaration. The cenvat credit in respect of gunny bags was disallowed on the ground that the same was not covered by the declaration filed under Rule 57G and the credit was disallowed in respect of the other items on the ground that the same are neither covered by the definition of input nor covered by the definition of capital goods. The cenvat credit demand confirmed in this appeal is Rs. 1,48,507/- for July 1995 and beside this penalty of Rs. 25,000/- has been imposed.
2. Heard both the sides.
3. Shri Aalok Arora, Advocate the Ld. Cousnel for the appellant, pleaded that the period of dispute in appeal no. E/2016/09 and 2017/09 is for the period prior to 23.07.1996 and in appeal no. E/2015/09, the part of the period of dispute i.e. from March 1995 to August 1995 is prior to 23.07.1996, that during period prior to 23.07.1996, the definition of capital goods, as given in Rule 57Q of the Central Excise Rules, 1944, covered machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products; components, spare parts and accessories of the aforesaid machines, machinery, plants, equipment, apparatus tools or appliances used for the aforesaid purpose, moulds and dies, generating sets used in the factory of the manufacture and also certain goods of chapter 84, 85, 90 & 69 mentioned in the definition, that interpreting the definition of capital goods as the same existed during period prior to 23.07.1996, the Tribunal in the case of Shakumbari Sugar and Allied Industries Ltd. vs CCE Meerut-I reported in 2013 (294) ELT 28, (Tri. Del) has held that during the period prior to 23.07.1996, since the definition of capital goods also covered plant, the MS Angles, Channels, Sections, Bars etc., used for making and erecting, even supporting structure for machinery would be eligible for cenvat credit, that this decision of the Tribunal was based on Larger Bench Judgement of the Tribunal in the case of Jawahar Mills vs CCE Coimbatore reported in 99 (108) ELT 47 (Tri. Del), which had been upheld by the Apex Court vide judgement and also the Apex Courts judgment in the case of Scientific Engineering Houses Pvt. Ltd. vs Comm. of Income Tax reported in AIR-1986-SC-338, that in view of this for the period prior to 23.07.1996, the steel items like MS Angles, Channels, Joists Plates, Steel Tubes, ER Wire Tubes etc., used in the manufacturing plant even if, used for supporting structure would be eligible for Modvat Credit, that in any case all these items as certified by the Chief Engineer of the appellants factory, have been used either as part of the Sugar Mill Machinery or in some cases as supporting structure, that in view of this, the denial of credit in respect of steel items for the period prior to 23.07.1996 is not correct, that the denial of modvat credit in respect of nickel screen and bags is incorrect as the required declaration has been made, that in any case since, the receipt of these items has not denied, merely for not filing the declaration, the credit cannot be denied and in this regard he relied upon the judgment in the case of JVM Tools Pvt. Ltd vs CCE Pune reported in 202 (144) 561 (Tri. Mum.) which is based on Larger Bench Judgement of the Tribunal in the case of Kamakhya Steels Pvt. Ltd vs CCE Meerut reported in 2002 (121) ELT 247 (Tri. LB), that as regards the Modvat credit of about Rs. 10,85,705/- taken in respect of various steel items during January 1997 to March 1997 period and which is the subject matter of dispute in the appeal no 2015/09, steel items, as certified by the Chief Engineer, had been used as parts of the machinery and that he has no objection to remand of the matter to the Original Adjudicating Authority for considering the appellants claim regarding their use. He, therefore, pleaded that the impugned order is not correct. He also pleaded that since during the period of dispute on the issue of admissibility of Modvat Credit on steel items used as structural support, there were conflicting judgments of the Tribunal till this issue was decided by the Larger Bench in the case of Vandana Global Limited, in case of denial of Modvat Credit, imposition of penalty is not called for. He, therefore, pleaded that the impugned order is not correct.
4. Shri R.K. Grover, the Ld. DR defended the impugned order by reiterating the findings of the Commissioner (Appeals) and pleaded that in these appeals, the appellants claim regarding use of the steel items is not backed by Chartered Engineers certificate and in this regard, the certificate produced by the Chief Engineer is of no value.
5. We have considered the submissions from both the sides and perused the records. So far as the the Modvat Credit in respect of Steel items, namely, MS Angles, HR Coils, Black Steel Tubes, ER Wire Steel Plates etc., is concerned, the appellants claim backed by the certificate given by their Chief Engineer is that these items have been used either as parts of the Sugar Mill Machinery or as supporting Structure for the machinery and that in both the cases during period prior to 23.07.1996, the capital goods cenvat credit would be admissible as during period prior to 23.07.1996, the definition of capital goods also covered plant and the Tribunal in the case of Shakumbari Sugar and Allied Industries Ltd. vs CCE Meerut-I reported in 2013 (294) ELT 28, (Tri. Del) has held that since for the period prior to 23.07.1996, the definition of capital goods, as given in Rule 57Q of the Central Excise Rules, 1944 covered plant, MS Angles, Channels, Section, Bars etc., used for making supporting structures for machinery would also be covered by the definition of capital goods and would be admissible for cenvat credit. We find that this judgment of the Tribunal is based on the Larger Bench of the Judgment in the case of Jawahar Mills vs CCE Coimbatore reported in 99 (108) ELT 47 (Tri. Del), which had been upheld by the Apex Court and also the Apex Courts judgment is based on its judgment in the case of Scientific Engineering Houses Pvt. Ltd. vs Comm. of Income Tax reported in AIR-1986-SC-338, wherein it has been held that the term Plant covers whatever apparatus is used by a businessman for carrying on his business including all the goods and chattels fixed or movable, live or dead which he keeps for permanent employment in a business. Following the Tribunals judgment in the case of Shakumbari Sugar and Allied Industries Ltd. vs CCE Meerut-I (Supra), we hold that denial of Modvat Credit in respect of steel items during March 1995 to August 1995 period in appeal no. E/2015/09 and denial of Modvat Credit during period from September, 1995 to June 1996 in appeal no. E/2016/06 and denial of Modvat credit for July 1995 in appeal no. E/2017/09 is not correct and as such the impugned order has to be set aside. However, as regards denial of Modvat Credit from period January 1997 to March 1997 in appeal E/2015/09, since during this period the definition of capital goods, as it existed during period prior to 23.07.1996 has been substituted by a new definition which covered the goods of certain specified chapter headings and as such for this period the iron and steel items would be eligible for credit as inputs only if the same had been used for manufacture of capital goods on their parts and would not be eligible for cenvat credit if the same had been used as foundation or as supporting structure for machinery, the matter would have to be remanded to the Original Adjudicating Authority after examining the appellants plea on the question regarding their usage. The cenvat credit for this period would be admissible only in respect of that quantity of iron and steel which had been used for fabricating sugar mill machinery or its components.
6. As regards denial of cenvat credit in respect of nickel screen in Appeal No. 2015/09 and denial of cenvat credit in respect of gunny bags in appeal no. E/2017/09, the credit has been denied only on the ground that the same are not covered by the declaration. However, on going through the records, it is seen that this ground for denial is not factually correct as both the items are covered by the declarations filed by the appellant. Therefore, the denial of Modvat credit in respect of these items is set aside.
7. In view of the above discussion, the impugned order passed by the Commissioner (Appeals) denying the Modvat Credit in respect of Steel items for the period prior to 23.07.1996 and in respect of nickel screen and gunny bags is set aside. The part of the order denying the Modvat Credit in respect of Steel Items for period January 1997 to March 1997 is also set aside and this matter is remanded to Original Adjudicating Authority for de novo decision after hearing the appellant regarding the use of steel items.
8. In the de novo proceedings for the period from January 1997 to March 1997, if any amount of Cenvat Credit is found to be not admissible penalty would not be imposable. The appeal stand disposed of as above. The Miscellaneous Application No. E/MA/55357 & 55358/2014 in respect of appeal No. E/2015 & 2016/09 for extension of stay also stands disposed of.
(Dictated and pronounced in open court) (S.K. Mohanty) (Rakesh Kumar) Member(Judicial) Member(Technical) Neha Page | 8