Custom, Excise & Service Tax Tribunal
Ponni Sugars Erode Ltd vs Salem on 11 March, 2019
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SZB, CHENNAI
COURT : Division Bench B1
E/40252/2013
(Arising out of Order-in-Appeal No. 56/2012-CE dated
23.11.2012 passed by the Commissioner of Central Excise,
(Appeals), Salem and
1. M/s. Ponni Sugars Erode Ltd. Appellant
Vs.
CCE, Salem Respondent
E/40271/2013 (Arising out of Order-in-Appeal No. 297/2012 dated 31.10.2012 passed by the Commissioner of Central Excise (Appeals), Trichy).
2. M/s. Kothari Sugars & Chemicals Ltd. Appellant Vs. CCE, Trichy Respondent APPEARANCE FOR APPELLANT : Shri M.N. Bharathi, Ld. Advocate For (Appeal No. E/40252/2013) Shri V. S. Manoj, Advocate For (Appeal No. E/40271/2013) FOR RESPONDENT :
CORAM SHRI MADHU MOHAN DAMODHAR, HON'BLE TECHNICAL MEMBER Shri P.DINESHA, HON'BLE JUDICIAL MEMBER Date of hearing: 11.03.2019 FINAL ORDER No. 40466-40467/2019 Per Madhu Mohan Damodhar 2 Both these appeals involve identical issue, they are taken up together for common disposal.
Appeal No. E/40252/2013
2. Pursuant to audit it emerged that the said assessee has availed Cenvat credit on MS Channels, Angles, Plates, Bars and HR Coils all falling under Chapter 72 of the Central Excise Tariff Act, 1985 as capital goods. Department took the view that the said goods are not covered within the ambit of definition of capital goods and accordingly initiated proceedings proposing recovery of an amount of Rs. 20,94,685/-as allegedly irregularly availed credit, with interest thereon. In adjudication, the original authority vide Order dated 30.04.2012, interalia, restricted the demand to Rs. 18,52,730/- and imposed equal penalty under Rule 15(2) of the Central Excise Rules, 2004, read with Section 11 AC of the Central Excise Act, 1944. In appeal, the Commissioner (Appeals) vide impugned order No. 56/2012-
CE dated 23.11.2012 upheld the order of the original authority. Hence this appeal.
Appeal No. E/40271/2013
3. On similar allegations that appellant had irregularly availed Cenvat credit to the tune of Rs. 16,10,177/- in respect of Joists, MS plates, MS angles, Channels, Beams, HR coils, HR plates, HR sheets, Chequered plates etc., used as structurals in construction of plant, as capital goods. Proceedings were 3 initiated, interalia proposing demand of the said credit amount with interest and also imposition of penalties under various provisions of law. The original authority vide an order dated 30.03.2012 confirmed the demand as proposed with interest and imposed equal penalty under Rule 15(2) ibid read with Section 11 AC ibid. In appeal, the Commissioner (Appeals) vide impugned order No. 297/2012 dated 31.10.2012 upheld the order of the original authority. Hence this appeal.
4. Today when the matter came up for hearing, Ld. Advocates Shri M.N. Bharathi appeared for (Appeal No. E/40252/2013) and Ld. Advocate Shri V. S. Manoj, for (Appeal No. E/40271/2013) made a number of submissions which are broadly summarized as under:-
i) The issue has been decided by the original authority and the Commissioner (Appeals) relying on the decision of the Larger Bench of the Tribunal in Vandana Global Ltd. & Others -
2010-TIOL-6242-CESTAT-DEL-LB.
ii) However, the Hon'ble High Court of Madras in Thiru Arooran Sugars Vs. CESTAT, Chennai - 2017 (355) ELT 373 (Mad.), has interlia held that the Tribunal was not right in disallowing credit on MS plates, MS joint and MS angles on the ground that they did not qualify as capital goods in Vandana Global Ltd. (supra).
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iii) The Larger Bench decision of Vandana Global Ltd. has been set aside by the Hon'ble High Court of Chhattisgarh in the judgment reported in 2018 (16)GSTL 462 (Chhattisgarh).
5. On the other hand, Ld. AR opposes the appeals. He places reliance on the ratio of the Hon'ble Apex Court in Saraswathi Sugar Mills Vs. CCE, Delhi - 2011 (271) ELT 465 (S.C), where it was observed that iron and steel structures are not components or capital goods used in sugar manufacturing plant. Ld. AR further submits that as per the definition of capital goods in Rule 2 (a) of the Cenvat Credit Rules, 2004, such items would necessarily have to fall within Sl.No. (3) as components, spares and accessories of the capital goods specified at Sl.No.(1). Ld. AR submits that the items like MS channels, angles, plates, bars, HR coils cannot by any stretch of imagination be considered as components, spares or accessories of such capital goods. Ld. AR further submits that the decision of the Hon'ble High Court of Madras in Thiru Arooran Sugars (supra) relied upon by the Ld. Counsels and also these decision of the Hon'ble High Court of Gujarat in Mundra Ports & Special Economic Zone Ltd. Vs. CCE - 2015 (39) STR 726 (Guj.) have appealed to Hon'ble Supreme Court by the department and are pending decision.
6. Heard both sides and have gone through the facts of these cases.
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7. Notwithstanding the averments of the LD. AR, we find that the issue is no longer res integra. It has been held in a slew of judgments by various High Courts, that MS structural that support plant and machinery or which went in erecting foundations to hold plant and machinery were integral part of capital goods. In Thiru Arooran Sugars (supra), the Hon'ble High Court has held that whether user test is applied or the test that they are integral part of capital goods is applied, such items are eligible to get Cenvat benefit as they fall within the scope and ambit of Rule 2 (a) (A) as well as 2 (k) of CCR, 2004. This judgment of the Hon'ble Madras High Court was relied on by the Hon'ble High Court of Chhattisgarh while overturning the Larger Bench decision of the Tribunal in Vandana Global (supra). The Hon'ble High Court of Chhattisgarh had also relied upon the judgement of the Hon'ble High Court of Gujarat in Mundra Ports & SEZ Ltd - 2015 (39) STR 726 (Guj.) which distinguished the Larger Bench decision in Vandala Global Ltd. & Others (supra) and interalia held cement and steel used in construction of new jetties and other commercial buildings would have to be treated as eligible inputs and the appellants concerned are entitled for input credit. We also find that the above judgments have been followed by this very Tribunal in a number of decisions., for example, in Chemplast Sanmar Ltd., Final Order No. 42922- 42923/2017 dated 15.11.2017.
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8. In the event, the impugned orders to the contrary in both these appeals cannot sustain, for which reason they have to be set aside, which we hereby do. Both the appeals No. E/40252/2013 and E/40271/2013 are allowed with consequential benefits, if any, as per law.
(Order dictated and pronounced in the Open Court) (P. DINESHA) (MADHU MOHAN DAMODHAR) MEMBER JUDICIAL MEMBER TECHNICAL BB