Customs, Excise and Gold Tribunal - Tamil Nadu
Cce vs Thirumalai Chemicals on 28 February, 2008
Equivalent citations: 2008(131)ECC62, 2008(157)ECR62(TRI.-CHENNAI), [2008(227)FLR592]
ORDER P. Karthikeyan, Member (T)
1. The captioned appeals pertain to eligibility to MODVAT credit of duty paid on various goods claimed to be capital goods by M/s. Thirumalai Chemicals Ltd. (TCL). TCL are engaged in the manufacture of Phthalic Anhydride and Maleic Anhydride. They set up a third plant and procured capital goods during the periods 10/95 to 12/95 and 2/96 to 7/96 for the purpose. Vide order in Appeal No. 110/2000, the Commissioner (Appeals) affirmed the order of the jurisdictional Assistant Commissioner denying credit of duty paid on Heat Transfer Salt (HTS), CTD bars, angles, channels, beams, joists and HR plates and reduced the penalty imposed on TCL from Rs. One lakh to Rs. 75,000/-. The Commissioner (Appeals) denied credit on HTS being refractory materials not eligible for credit during the material time. Credit was denied on iron and steel goods for the reason that they were building materials.
2. In the appeal filed by the Revenue (E/1347/2000), the revenue has prayed for vacating the impugned order in so far as it allowed capital goods credit on cables, control panels and switches.
3. After hearing both sides we find that, as rightly argued by the Ld. Counsel for the assessee, in the case of Jawahar Mills Ltd. v. CCE, Coimbatore , a Larger Bench of this Tribunal had decided that wires and cables would be covered by the expression 'plant', they being items necessary for the assessee to carry on his business and goods being not in the nature of consumables. It was held that wires and cables, and control panels were eligible capital goods. Therefore, we find that revenue's challenge to the impugned order No. 110/2000, in so far as it allowed capital goods credit on cables, control panels and switches is not sustainable. The appeal filed by the Revenue is accordingly dismissed.
4. TCL has filed appeal No. E/1454-C/2000 against the order in appeal No. 110/2000, in so far as it denied Modvat credit to materials such as HTS, CTD bars, angles, channels, beams, joist and HR plates. The appeal also seeks to vacate the penalty of Rs. 75,000/- imposed on TCL. We have heard the parties. We find that HTS is filled inside the switch condensers and distillation system which cannot function without HTS. HTS forms an integral part of the plant for the manufacture of Phthalic Anhydride. Therefore we hold HTS as a component of the assessee's plant, which falls under CSH 84.19 of the Central Excise Tariff. In terms of Clause (d) of Explanation 1 to Rule 57Q(1), components of a plant falling under CSH 84.19 was eligible for capital goods credit. As regards the iron and steel goods such as angles, joists, channels, CTD bars etc., it is seen from the records that these items are parts of the plant in view of the ratio of the decision in Jawahar Mills Ltd. (supra). Steel angles, channels and beams support various equipments in the assessee's plant. These are structurals used to support intermediate vessels and/or goods used in the fabrication of various equipment forming parts of the plant. MS sheets and SS Sheet coils are used in fabricating reactors, tanks etc. which are also parts of the plant. Therefore, the impugned iron and steel items were parts/components of the assessee's chemical plant. The penalty imposed was uncalled for. Therefore, we allow this appeal filed by TCL.
5. TCL has filed another appeal No. 1454-B/2000 against the order in Appeal No. 112/2000, challenging denial of Modvat credit on iron and steel goods, paints and cement as well as a penalty of Rs. 50,000/-. As regards CTD bars, angles, channels, HR coils, SS sheets, beams, joists and HR plates, we find that they were put to use in the fabrication of various parts of the plant such as reaction vessels, tanks, or they were used as structural support to hold reaction vessels etc. These items are eligible capital goods just as the items discussed under the party's appeal E/1454-C/2000. Paints used for the safety/protection of the plant are also eligible for capital goods credit.
6. As regards cement, the assessee has argued that the same was used in the building of foundation on which machinery were erected. Cement was a must for erecting plant and machinery and equipment. In this connection, the Ld. Counsel for the appellants cited various decisions of the Tribunal such as CCE v. India Cements Ltd. 2007 (208) ELT240 (Tri.-Chen.), CCE v. India Cements Ltd. 2005 (192) ELT 664 (Tri.-Chen.) and Lloyds Metals and Engineers Ltd. v. Additional Commissioner of Central Excise, Nagpur wherein the Tribunal had allowed capital goods credit for cement used in civil foundation for setting up machinery. The Ld. JDR argued that credit was not admissible for cement used in the construction of foundation for machinery and cited the judgment of the Hon'ble High Court of Rajasthan in UOI v. Hindustan Zinc Ltd. 2007 (218) ELT 503 (Raj.). We find that High Court had held in that judgment that cement used for construction of foundation for machinery was not eligible for capital goods credit. All the impugned capital goods were used in the erection of an additional plant for the manufacture of chemicals by the assessee. Therefore the penalty imposed on TCL for claiming credit on the goods is not justified. Accordingly, we allow this appeal of the assessee except for their claim as regards capital goods credit for cement.
(Operative part of the order pronounced in open court on 28.02.08)