Custom, Excise & Service Tax Tribunal
Steel Authority Of India Limited vs Bolpur on 7 March, 2024
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO. 1
Excise Appeal No. 71440 of 2013
(Arising out of Order-in-Original No. 30/COMMR/BOL/13 dated 18.09.2013 passed by
the Commissioner of Central Excise and Service Tax, Bolpur, Nanoor Chandidas Road,
Sian, Bolpur, District - Birbhum (W.B.), PIN - 731 204)
M/s. Steel Authority of India Limited : Appellant
IISCO Steel Plant,
Burnpur Works, Burnpur,
District: Burdwan (W.B.)
VERSUS
Commissioner of Central Excise and Service Tax : Respondent
Bolpur, Nanoor Chandidas Road, Sian, Bolpur,
District - Birbhum (W.B.), PIN - 731 204
APPEARANCE:
Shri Deepro Sen, Advocate for the Appellant
Assisted by Smt. Udita Saraf, Advocate
Shri S.S. Chattopadhyay, Authorized Representative for the Respondent
CORAM:
HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NO. 75468 / 2024
DATE OF HEARING / DECISION: 07.03.2024
Order : [Per Shri K. Anpazhakan]
The present appeal has been filed against the
impugned Order-in-Original No.30/Commr/Bol/13
dated 18.09.2013 passed by Commissioner of Central
Excise and Service Tax, Bolpur, wherein the Ld.
Commissioner has confirmed the demand of service
tax along with interest and penalty.
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Appeal No.: E/71440/2013-DB
2. The facts of the case are that the Appellant is a
manufacturing unit of Steel Authority of India Ltd.
(hereinafter referred to as 'SAIL') engaged in the
manufacture of Iron and Steel products classifiable
under Chapters 72 and 73 of the Central Excise Tariff
Act, 1985. The main raw materials viz. iron ore,
manganese required for the manufacture of the final
products are procured by the Appellant from Gua and
Manoharpur mines, which are also part of the legal
entity of SAIL. The abovementioned captive mines of
SAIL were under the control of Raw Material Division
for administrative convenience. However, with effect
from 2021, the raw material division was dissolved
and thus, such captive mines are under administrative
control of the manufacturing unit as per the location
of the captive mines and respective manufacturing
units. The mines cater to the raw material
requirement of the various manufacturing units of
SAIL including the Appellant's plant. In case of excess
amount of raw material, the same is also sold to the
other steel plants. The mines avails various services
at the mines like Cargo handling, mining service,
security services, etc. within the mines. These service
providers raise invoice in favour of the mines and
subsequently such mines avails credit of input
services. Thereafter, the credit of such service is
distributed to the manufacturing units of the SAIL
through ISD invoices.
2.1 Proceedings were initiated against the Appellant
vide issuance of a Show Cause Notice dated
29.08.2012. It has been alleged that the Appellant has
availed CENVAT Credit on the strength of ISD invoices
issued by the mines, which produce iron
ore/manganese, which are not chargeable to excise
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Appeal No.: E/71440/2013-DB
duty nor do the mines provide any taxable output
services. Since the said mines are exempted from
duty payment and also not an office of the Appellant
but under the administrative control of the SAIL RMD,
therefore it is alleged that the mines are not eligible
to distribute credit as ISDs in terms of Rule 2(m) of
the CENVAT Credit Rules, 2004. Accordingly, the
Notice proposed to recover CENVAT Credit amounting
to Rs. 17,76,34,847/- from the Appellant, along with
interest and equivalent penalty. The said Show Cause
Notice was adjudicated and the demands raised in the
Notice were confirmed by the Ld. Commissioner of
Central Excise, along with interest and penalty, vide
the impugned order dated 18.09.2013 issued on
24.09.2013.
3. The Appellant submits that both the mines as
well as the manufacturing unit belongs to one legal
entity i.e. SAIL, which is engaged in manufacture of
Steel; the subject mines are set up primarily to serve
as captive mines to manufacturing units of SAIL and
thus bears an integral link to steel plants; SAIL is only
responsible for overall management of mines and
steel plants; the internal division is merely to facilitate
better functioning and administration of the mines and
plants. Hence, the mines form an integral part of the
SAIL's manufacturing plants including the Appellant,
by serving as captive mines and supplying necessary
raw materials; that it is a settled legal position that
captive mines constitute one integrated unit together
with the manufacturing unit and thus, inputs used in
captive mines for production of dutiable goods in a
manufacturing unit would be eligible for credit.
Reliance here is placed on the decision of Vikram
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Appeal No.: E/71440/2013-DB
Cement v. Commissioner 2006 (197) ELT 145
(SC).
3.1. The Appellant submits that the issue is no longer
res integra, as this Tribunal decided the same issue in
their own case for the period June 2016 to June 2017,
reported as Steel Authority of India Ltd. v.
Commissioner of CGST & CE, Bolpur 2023 (12)
TMI 1062- CESTAT Kolkata, wherein, on similar
facts, it had been held by this Tribunal that the
Appellant is entitled to avail CENVAT Credit of input
services relating to captive mines.
3.2. In view of the above submissions, the Appellant
prayed for setting aside the demands of service tax
along with interest and penalty confirmed in the
impugned order and allow their appeal.
4. The ld. Authorized Representative appearing on
behalf of the Revenue reiterated the findings in the
impugned order.
5. We find that the issue is no longer res integra
as this Tribunal has already decided the same issue in
their own case for the period June 2016 to June 2017,
reported as Steel Authority of India Ltd. v.
Commissioner of CGST & CE, Bolpur 2023 (12)
TMI 1062- CESTAT Kolkata, wherein, on similar
facts, it has been held by this Tribunal that the
Appellant is entitled to avail CENVAT Credit of input
services relating to captive mines. The present appeal
covers the period 2006-07 to 2011-12 (up to June
2012), for the same unit. The relevant part of the said
decision is reproduced below:
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Appeal No.: E/71440/2013-DB
"7. We observe that the issue to be decided in the present
appeal is whether the Appellant is eligible to avail CENVAT
Credit of input services relating to captive mines, which is
distributed to the Appellant vide ISD invoices. We find
that both the mines as well as the manufacturing unit
belongs to one legal entity i.e. SAIL, which is engaged in
manufacture of Steel. The subject mines are set up
primarily to serve as captive mines to manufacturing units
of SAIL and thus bears an integral link to steel plants. We
observe that the input services like security service,
mining service, transportation etc used by the captive
mines bears a direct nexus with Appellant's units
manufacturing final products i.e. Steel. Hence, such
services are very well covered within the scope of the
definition of 'input services'. Rule 3 of CCR does not
mandate that for the purpose of availment of credit on
input services, such services should be received within
the premises where manufacture of final product takes
places but only provides that services should be used in
or in relation to the manufacture of final products. Thus,
we find that the Appellant is entitled to avail credit of
service tax paid on input services received at the mines,
which serves as an intermediate product for manufacture
of final product i.e. steel items.
8. We observe that the Issue is no longer res integra as
this Tribunal on identical facts and circumstances has
decided the same issue in favour of the Appellant in
the case of Usha Martin Ltd. v. CCE, Jamshedpur, 2023
(6) TMI 1153 - CESTAT Kolkata. The relevant paras of the
said decision are reproduced below:
...........
9. By relying on the decision cited above we hold that the Appellant is eligible to avail CENVAT Credit of input services relating to captive mines, which is distributed to the Appellant vide ISD invoices. Hence, we hold the demand of reversal of Cenvat credit along with interest and penalty confirmed vide the impugned order dated 30.09.2019, is not sustainable."
6Appeal No.: E/71440/2013-DB
6. In view of the above discussions, we hold that the mines and the Appellant's manufacturing unit belongs to one legal entity, which is engaged in manufacture of dutiable goods. Therefore, we hold that the observation given by the Ld. Commissioner that distribution of credit by the mines is in contravention of Rule 7(b) of the CENVAT Credit Rules is legally not tenable. Thus, we hold that the distribution of credit by captive mines as ISD is in accordance with the provisions of law.
7. In view of the above discussions, we set aside the demands of service tax along with interest and penalty confirmed in the impugned order and allow the appeal filed by the appellant.
(Operative part of the order was pronounced in open court) Sd/- Sd/-
(K. ANPAZHAKAN) (ASHOK JINDAL) MEMBER (TECHNICAL) MEMBER (JUDICIAL)