Customs, Excise and Gold Tribunal - Delhi
Sanghi Industries Ltd. vs Cce on 21 April, 2006
Equivalent citations: 2006(110)ECC49, 2006ECR49(TRI.-DELHI)
ORDER M.V. Ravindran, Member (J)
1. The issue involved in this case is regarding denial of Modvat Credit to the appellants on the following 4 items:
(i) Ligh Diesel Oil/Furnace Oil used in Power Plant situated 12 kms away from clinker unit;
(ii) Steel Plates, H.R. Plates, H.R. Coils, Corrugated sheets, Flats/Angles, Reinforcing bar, Beam/Chanels Iron & Steel,
(iii) Galvanized Structure Rolling mills,
(iv) Welding Electrodes.
2. The credit on the above items is sought to be denied on the various grounds and few of them being inputs not used in the factory, no evidence produced to show that they are using capital goods in respect of transmission line and they are not capital goods etc.
3. Considered the submissions made by both sides and perused the record. At the outset learned Advocate, appearing for the appellants, submitted that they are not challenging the credit of the duty on welding electrodes. To that extent appeal of the appellants is rejected. He also submitted that in respect of consumption of Steel Plates, H.R. Plates, H.R. Coils, Corrugated sheets, Flats/Angles, etc. in the manufacturing of capital goods, they have substantial record to prove that the capital goods are manufactured out of these materials and also consented that if this limited issue is remanded back they are in a position to satisfy the lower authorities and avail the credit. We find that this is very fair proposition and we remand the issue regarding consumption of Steel Plates, H.R. Plates, H.R. Coils, Corrugated sheets, Flats/Angles, etc. in the manufacture of capital goods, to be decided by the adjudicating authority, afresh after granting the appellants an opportunity of personal hearing.
4. In respect of credit of Light Diesel Oil/Furnace Oil used in Power Plant situated 12 kms away from clinker unit we find that the Tribunal in the case of Haldia Petrochemicals Ltd. v. CCE, Haldia 2005 (123) ECR 158 (Tri.-Delhi) has held in Para 18 as follows:
The Rules specifically provide that Cenvat predit is admissible on inputs, as such, or after being partially processed, are sent to a job worker' for further processing, testing, repair, re-conditioning, or any other purpose provided the goods are received back in the factory of production within 180 days of their being sent to a job worker. It is accepted in the order that the steam and electricity were being received back in the petrochemical complex within a period of 2-3 days only. The power plant is indeed a job worker because all the raw materials are supplied by the appellants to the power plant, free of charge of doing certain operations and (intermediate) products so produced are returned to the petrochemical complex of the appellant. The appellant does not pay anything to the power plant for electricity or steam. The power plant is completely dedicated to the petrochemical complex and was in fact set up for generation of electricity and steam for the exclusive use by the petrochemical complex of the appellant. Only conversion charges are paid by the appellant to the power plant for the said operations. In our opinion, the expressions "further processing" and "any other purpose "mentioned in Rule 4(5)(a) are fairly wide and would take their colour from the processes mentioned in the definition of 'input'. As such the generation of electricity or steam as intermediate products would fall within the scope of these expressions, and would amount to job work.
5. The ratio of above order covers the present issue, as in this appeal the power plant which is consuming Light Diesel Oil/Furnace Oil is their own. The case of Haldia Petrochemicals (supra), settled that the credit of duty paid on Light Diesel Oil/Furnace Oil is admissible, if they are sent to job workers and electricity is brought back we find that, in the case before us, the electricity is generated by use of Light Diesel Oil/Furnace Oil in their own unit, and we do not find any reason to deny the credit to appellants on this point.
6. In respect of credit on Galvanized structure, we find that this item is used as part of transmission line i.e. line which brings power to the factory from power plant. The issue is covered by the decision of the Hon'ble Supreme Court in the case of Birla Corporation v. CCE 2005 (186) ELT 266 (SC) and followed in CCE, Nagpur v. Manikgarh Cement Ltd., as reported at . In both the above cases the apex Court has held that spares used for the purpose of transporting the crushed limestone from the mines situated away from the factory are entitled to Modvat credit. The said ratio squarely applies in this case as these spare are used in transmission line which brings power to the power plant. Accordingly appeal is partly allowed, as indicated in the above paragraphs.
(Dictated & pronounced in the Open Court.)