Custom, Excise & Service Tax Tribunal
M/S. Mukund Limited vs Commissioner Of Central Excise, ... on 16 September, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/1598/2010-Mum (Arising out of Order-in-Appeal No. PKS/26/BEL/2010 dt.25.5.2010 passed by the Commissioner of Customs & Central Excise (Appeals) Mumbai-III) For approval and signature: Honble Mr. Anil Choudhary, 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?
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M/s. Mukund Limited
:
Appellant
VS
Commissioner of Central Excise, Belapur
:
Respondent
Appearance
Shri P.V. Patankar, Advocate for Appellant
Shri S.V. Nair, Assistant Commissioner (A.R) for respondent
CORAM:
Mr. Anil Choudhary, Member (Judicial)
Date of hearing : 16/09/2015
Date of decision : 16/09/2015
ORDER NO.
The appellant M/s. Mukund Ltd. have appealed against order-in-appeal dt. 12.5.2009 by which the Cenvat Credit availed on the Cement Sheets (A C Sheets) and Corrugated Aluminum Sheets have been disallowed, holding that the same do not qualify as capital goods as defined in Rule 2(a) (A) of Cenvat Credit Rules, 2004 relying on the Ruling in the case of Vandana Global Vs. CCE 2010-TIOL-624-CESTAT-DEL-LB.
2. The facts are that the appellant is engaged in manufacture of Iron and Steel products like Billets, Blooms, Bars & Rods, Wire etc. falling under Chapter 72, 73 and 84 of the CETA. The appellant is engaged in both, alloy and non-alloy steel. The appellant expanded the capacity by installing automatic wire rod mill during the period 2006-007. The mill has number of auxiliary and ancillary system. In the course of modernization of wire rod mill falling under Heading 84.55 of Central Excise Tariff, the following equipments are also installed as finishing facility. They are also covered in respective Central Excise Tariff Chapters as under and are capital goods as per definition, without which equipments cannot function:
Central Excise Tariff Bar Sphereodised Annealing Furnace I & II 84.60 Billets Grinding Machine 84.74 Heat Treatment Furnaces 84.61 Ultra Sonic Testing Machine 84.56 Bloom Shot Blasting Machine 84.59 Wire Rod Blasting Machine 84.59 Bright Bar Machines 84.63 Billet Straightening Machine 84.62 Billet Reheating Furnace 84.61 Roughing Mill Stand for WRM 84.60 EOT Crane and Supporting Structure 84.26 Black Bar Straightening Machine 84.62 Garret Route Nad Block Route 84.55 These equipments and facilities enhance the metallurgical properties and improves the quality parameters as required for various grades of steel produced by appellants. For above equipments and its auxiliary and ancillary system the trenches and tunnel, cellars are required for housing the hydraulic system, cable laid in cable tray, the pipes for water supply system, ladle support, bottom connection of cables to panels which are underground and required to be covered by including operating station, control room, protective guards are provided to critical and delicate automatic equipments and its surrounding area to avoid uncertain fall of raw materials etc.
3. In the factory of the appellant some time in June-July 2008, on the objection on the audit party, on availing of credit on AC Sheets and Aluminum Corrugated Sheet. The assessee reversed Cenvat Credit on 14.7.2008 of Rs.3,37,752/- and further paid the amount of interest of Rs.76,218/- vide challans totaling Rs.4,13,970/- during July-August 2008. Thereafter on being so advised, in view of the ruling of this Tribunal in the case of Bhushan Steel Strips Vs. CCE being Final order dt. 14.12.2007 reported at 2008 (223) ELT 517 wherein it was held that in case of credit availed, the material being sheets etc. under the fact that they were essential for better quality of output product/goods in the manufacture from climatic conditions, including atmospheric gases and dust particles etc. which create oxides on the surface of the sheets manufactured and the same are not technically acceptable as finished goods. This Tribunal held that it was technically essential to provide protective cover in and around the mill area to protect it from exposure to environment and accordingly held the credit admissible on the reversing material. The appellant filed refund claim for Rs.4,13,970/- on 22.10.2008. Show cause notice dt. 12.1.2009 was issued and the same was adjudicated vide Order-in-Original dt. 12.5.2009 rejecting the refund claim on the ground that the earlier ruling of the Tribunal in the case of Bhushan Steel & Strips Ltd. (supra) have been appeal against by the Revenue before the High Court.
4. Being aggrieved, the appellant preferred an appeal before Commissioner (Appeals), on the ground amongst others that the adjudicating authority have misconceived the provisions of Rule 2(a) (A) of the Cenvat Credit Rules and has further held that sheets are used in product machines/equipments and thus are components/parts/accessories and are other than capital goods within the meaning of Rule 2(a) A, (iii) of Cenvat Credit Rules, 2004. The Ld. Commissioner (Appeals) was pleased to dismiss the appeal observing that from the perusal of the definition of capital goods, sheets utilized by the appellant cannot be specified as capital goods. It was further observed that the assessee have not adduced any evidence that in absence of these goods, the capital goods could not be able to discharge their function. Further observed that, it has been admitted by the appellant that these goods were used for providing protective cover only and as such they must be part of structure created in the factory which is attached to earth, accordingly, relying on the Larger Bench decision of this Tribunal in the case of Vandana Global Ltd. (supra), wherein the ruling of a Bhushan Steel Strips Ltd. was overruled. Being aggrieved the appellant is before this Tribunal.
5. Ld. Counsel for the appellant Shri P.V. Patankar submit that it is not in dispute that the sheets in question have been utilized for covering the machinery and/or machines which is necessary for smooth running and manufacture of quality output, as the same provides protection from dust etc. as well maintenance of right temperature for production. In this view of the matter, AC Sheets and Aluminium Corrugated Sheets utilized for that purpose clearly fall within the definition of capital goods under Rule 2(a)A(iii) being accessories of capital goods. Ld. Counsel further relies on the ruling of the Apex Court decision in the case of Commr. C.Ex., Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd. 2010 (255) E.L.T. 481 (S.C.) wherein the facts were that Steel plates and M.S. Channels were used in fabrication for chimney for diesel generating set. Relying on the user test evolved in Jawahar Mills judgment of the Honble Apex Court, that it is not the case i.e. steel plates and MS channels are not required for fabrication of chimney as integral part of diesel generating sets which is mandatory under pollution control laws for proper discharge of effluents gases. Accordingly, Cenvat Credit was held admissible under Rule 2(a)A (iii) of Cenvat Credit Rules read with erstwhile Rule 57Q of the Central Excise Rules, 1944. The said ruling of the Honble Apex Court, it is pointed that was followed by Honble Madras High Court in the case of India Cements Ltd. Vs. CESTAT, Chennai 2015 (321) E.L.T. 209 (Mad.) wherein India Cements had utilized MS Rod, Sheet, MS Channel, MS Plate, Flat etc. used in construction of work plant and machinery being fabrication of fly ash hooper, fly ash bun, fly ash handling system and kiln brick laying work. The Cenvat Credit was also held admissible under similar facts and circumstances by SMC Bench of this Tribunal in the case of Commissioner of Central Excise, Nagpur Vs. Lloyds Metals & Engg. Ltd. 2014 (309) E.L.T. 533 (Tri.-Mumbai), have also held the Cenvat Credit eligible for M.S. Bar, beams etc. for setting up kiln, cooler and chimney in factory.
6. Ld. DR relies on the impugned order and further relies on the ruling in the case of Commr. of Cus. & C. Ex., Vs. Rathi Steel & Power Ltd. 2015 (321) E.L.T. 200 (All.) wherein the Honble High Court of Allahabad considering the fact that the assessee have availed Cenvat Credit on items like Shapes & Section, M.S. Plate, H.R. Plate, M.S. Channel, Angles, Roughly Shaped, Forged Rolls, Plaints & Primer etc. the same were used in construction of factory shed, building or laying of foundations or making of structure for support of capital goods, relying on ruling of the Larger Bench of Tribunal in the case of Vandana Global Ltd., held that the credit is inadmissible.
7. Having considered the rival contentions, I find that it is an admitted fact that the sheets in question on which Cenvat Credit have been availed have been realized for providing cover to the machinery and its moving parts in order to protect them from dust particles etc. and to maintain temperature for good quality of output, more particularly in view of the fact that the factory is fitted with overhead cranes which runs on gantry throughout the factory shed from one corner to other. As such there is a probability of material falling on the machines and its moving parts. Further, it is not disputed by Revenue that the sheets in question have been utilized to provide cover to the accessories in the automatic wire mill plant. In this view of the matter, I hold that the appellant is entitled to Cenvat credit as the sheets so utilized portable nature of accessories of the capital goods and as such are capital goods as defined in Rule 2(a)A(iii) of the Cenvat Credit Rules 2004. Thus, the appeal is allowed and the impugned order is set aside. The adjudicating authority is directed to give cash refund of the interest paid by the appellant which was paid by challan and the appellant is entitled to take back cenvat credit of the amount so reversed, being Rs.3,37,752/-. The adjudicating authority shall disburse the cash refund within a period of 45 day from the date of receipt of copy of this order.
(Dictated in court) (Anil Choudhary) Member (Judicial) Sm 7