Custom, Excise & Service Tax Tribunal
Steel Authority Of India Ltd vs Bolpur Commissionerate on 25 June, 2024
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO. 1
Excise Appeal No. 75272 of 2019
(Arising out of Order-in-Appeal No. 298/Bol-CE/2018-19 dated 30.10.2018 passed
by the Commissioner of CGST & Central Excise, Siliguri Appeals Commissionerate,
Haren Mukherjee Road, Hakimpara, Siliguri 734 001)
M/s. Steel Authority of India Limited : Appellant
IISCO Steel Plant,
Burnpur Works Plant,
Burdwan-713 325
VERSUS
Commissioner of Central Excise & Service Tax : Respondent
Asansol-II Division,
Bolpur Commissionerate
APPEARANCE:
Ms. Udita Saraf, Advocate for the Appellant
Shri P. Das, Authorized Representative for the Respondent
CORAM:
HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NO.76362/2024
DATE OF HEARING / DECISION: 25.06.2024
Order: [PER SHRI ASHOK JINDAL]
The appellant is in appeal against the impugned
order.
2. The facts of the case are as under: -
(i) 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,
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Appeal No.: E/75272/2019-DB
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.
(ii) 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.
(iii) 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 23.06.2016. 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 duty nor do the mines provide any taxable
output services. Since the said mines are exempted
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Appeal No.: E/75272/2019-DB
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. 43,71,470 /- 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 30.10.2018.
3. The Ld. Counsel appearing on behalf of the
appellant submits that in their own case for the
earlier period, the issue has been examined by this
Tribunal and vide Final Order No. 75468 of 2024
dated 07.03.2024 in Excise Appeal No. 71440 of
2013 (CESTAT, Kolkata) wherein CENVAT Credit was
allowed to the appellant. Therefore, it is submitted
that the issue is no more res integra and accordingly,
the impugned order is to be set aside.
4. On the other hand, the Ld. Authorized
Representative for the respondent supported the
impugned order.
5. Heard the parties and considered their
submissions.
6. We find that in the appellant's own case for the
earlier period (supra), the issue has been examined
by this Tribunal, wherein this Tribunal observed that:
-
"5. We find that the issue is no longer res integra as this Tribunal has already decided the same issue Page 4 of 6 Appeal No.: E/75272/2019-DB 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:
" 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:
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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."
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."
6.1. As in the appellant's own case for the earlier period, CENVAT Credit has been allowed to the appellant on input service received at captive mines through ISD invoices, we hold the appellant is entitled to take CENVAT Credit. Therefore, we do not find any merit in the impugned order and the same is set aside.
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7. The appeal is allowed with consequential relief, if any.
(Operative part of the order was pronounced in open court) (ASHOK JINDAL) MEMBER (JUDICIAL) (K. ANPAZHAKAN) MEMBER (TECHNICAL) rkp