Custom, Excise & Service Tax Tribunal
Calderys India Refractories Ltd vs Cce & St, Bhopal on 12 October, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
SINGLE MEMBER BENCH
Court No.III
Appeal No. E/50057/2015-EX-SM
(Arising out of OIA No.BPL-EXCUS-000-APP-102-14-15 dt.19.8.14 passed by CCE(A), Bhopal)
Date of Hearing/Decision: 12.09.2015
For approval & Signature:
Honble Smt.Sulekha Beevi C.S., Member (Judicial)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3.
Whether their Lordships wish to see the fair copy of the order?
seen
4.
Whether order is to be circulated to the Department Authorities?
Yes
Calderys India Refractories Ltd. Appellant
Vs.
CCE & ST, Bhopal Respondent
Appearance:
Present for the Appellant: Shri Sachin Manish Saharan, Advocate Present for the Respondent: Shri Govind Dixit, AR Coram: Honble Smt.Sulekha Beevi C.S., Member (Judicial) Final Order No.53190/2015 Per: Sulekha Beevi C.S. The question that has to be considered in the above appeal is whether the credit is admissible on welding electrodes.
2. The appellant has filed the appeal challenging the impugned order which upheld disallowance of credit, ordered recovery of the same alongwith interest and imposed equal amount of penalty.
3. The appellant is engaged in the manufacture of refractory materials and is also availing the credit on inputs, capital goods and input service. During the audit, it was observed by the department that, the appellant availed credit on welding electrodes and gas as capital goods. The show cause notice raising the above contention was issued to the appellant. The appellant contested the same stating that the credit has been availed on welding electrodes as inputs and not as capital goods. After adjudication, the order-in-original was passed disallowing the credit. In appeal, the same was upheld by the impugned order.
4. Learned Counsel for the appellant submitted that the allegation in the show cause notice that the credit was availed on welding electrodes and gas as capital goods is incorrect and baseless. The welding electrodes and gas was used by the appellant for repair of plant and machinery. These machineries are essentially used for manufacture of final products. Thus, welding electrodes are indirectly used by appellant in or in relation to the manufacture of final products. Learned Counsel placed reliance on the following judgement:-
(1) Bajaj Hindustan Ltd. vs. CCE, Lucknow-2014 (313) 563 (Tri.-Del.) (2) CCE, Raigad vs. Bhushan Steel & Strips Ltd.-1015 (316) ELT 324 (Tri.-Mum.) (3) CCE vs. Ace Glass Container Ltd.-2014 (34) STR 805 (Uttarakhand).
5. Per contra, learned DR contended that credit has been availed on welding electrodes as capital goods. That these electrodes would not fall within the definition of capital goods and therefore the credit is not admissible. He further urged that the Commissioner (Appeals) has rightly relied upon the decision reported in Sree Rayalaseema H-Strength Hypo Ltd. vs. CCE-2012 (278) ELT 167 (A.P).
6. Heard both sides and perused the records.
7. The issue is no longer res-integra and the Tribunal in Bajaj Hindustan Ltd. case (supra) has discussed the judgements of various High Courts on the issue as under:-
6.?So far as eligibility for Cenvat credit of the welding electrodes used for repair and machinery of the plant and machinery is concerned, this issue stands decided by the judgment of three High Courts, as mentioned above - judgment of Honble Rajasthan High Court in the case of Hindustan Zinc Limited v. Union of India (supra), judgment of Honble Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd. v. CCE, Raipur (supra) and judgment of Honble Karnataka High Court in the case of CCE, Bangalore-I v. Alfred Herbert (India) Ltd. (supra). When three High Courts have decided this issue in favour of the appellant, in my view notwithstanding the contrary judgment of Honble Andhra Pradesh High Court in the case of Sree Rayalaseema Hi-Strength Hypo Ltd. v. CCE, Tirupati (supra), it is the judgment of the other three High Courts which would hold the field. Moreover, repair and maintenance is an activity without which manufacturing activity would not be commercially feasible even though theoretically it may be possible to carry out manufacturing activity without repair of plant and machinery. Apex Court in the case of J.K. Cotton Spg. & Weaving Mills Co. Ltd. v. Sales Tax Officer, Kanpur reported in 1997 (91) E.L.T. 34 (S.C.), while interpreting the scope of the expression used in the manufacture of in Section 8 (3)(b) of Central Sales Tax Act, 1956 has held that if a process or activity is so integrally related to the ultimate manufacture of goods so that without that process or activity, the manufacture may, even if theoretically possible, be commercially inexpedient, the goods intended in that process or activity would have to be treated as used in the manufacture. When the Apex Court has interpreted the expression used in the manufacture of in the above manner, the scope of the expression - used in or in relation to manufacture, whether directly or indirectly in the definition of input in Rule 2(k) of the Cenvat Credit Rules, 2004 would be much wider.
8. The judgement laid in Sree Rayalaseema H-Strength Hypo Ltd. (supra) relied by Revenue is distinguished in the said judgement. Applying the ratio laid in the above judgement in Bajaj Hindustan Ltd. case, I hold that denial of credit on welding electrodes and gas is unjustified.
9. In the result, the impugned order is set aside and the appeal is allowed with consequential relief.
(pronounced in the open court) (Sulekha Beevi C.S.) Member (Judicial) mk 4