Custom, Excise & Service Tax Tribunal
Ultratech Cement Ltd vs Ce & Cgst Ghaziabad on 26 September, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Excise Appeal No.50914 of 2014
(Arising out of Order-in-Original No.10-EX/COMMR./GZB/2013-14 dated
30.10.2013 passed by Commissioner (Appeals) Customs & Central Excise,
Ghaziabad)
M/s Ultratech Cement Ltd., .....Appellant
(Unit Dadri Cement Ltd. Village - Ranauli,
Latifpur, Gautam Buddha Nagar)
VERSUS
Commissioner of Central Excise, Ghaziabad ....Respondent
(Kamla Nehru Nagar, C.G.O. Complex, Ghaziabad) WITH Excise Appeal No.50913 of 2014 (Arising out of Order-in-Original No.10-EX/COMMR./GZB/2013-14 dated 30.10.2013 passed by Commissioner (Appeals) Customs & Central Excise, Ghaziabad) Shri Piyush Raj, Vice President (Tech), .....Appellant (Unit Dadri Cement Ltd. Village - Ranauli, Latiffpur, Vidyut Nagar, Gautam Buddha Nagar) VERSUS Commissioner of Central Excise, Ghaziabad ....Respondent (Kamla Nehru Nagar, C.G.O. Complex-II, Ghaziabad) AND Excise Appeal No.50915 of 2014 (Arising out of Order-in-Original No.10-EX/COMMR./GZB/2013-14 dated 30.10.2013 passed by Commissioner (Appeals) Customs & Central Excise, Ghaziabad) Shri Shyam Bihari Maheshwari, ....Appellant (Unit Dadri Cement Ltd. Village - Ranauli, Latifpur, Gautam Buddha Nagar) VERSUS Commissioner of Central Excise, Ghaziabad ....Respondent (Kamla Nehru Nagar, C.G.O. Complex, Ghaziabad) APPEARANCE:
Shri Atul Gupta, Advocate & Shri Prakhar Shukla, Advocate for the Appellant Shri Sarweshwar T. Khairnar, Authorised Representative for the Respondent CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) Excise Appeal No.50913 of 2014 2 Excise Appeal No.50914 of 2014 Excise Appeal No.50915 of 2014 FINAL ORDER NOs.-_70139-70141/2023 DATE OF HEARING : 26 September, 2023 DATE OF DECISION : 26 September, 2023 P.K. CHOUDHARY:
The present appeals have been filed by the Appellants against the impugned Order-in-Original passed by the Commissioner of Central Excise, Ghaziabad (Adjudicating Authority) confirming the proposal, made vide the show cause notice dated 19.04.2012 for denial of credit availed on steel items used in the manufacture of support structures for capital goods and PSC Sleepers for laying railway line and order for recovery thereof. Vide the impugned order, the learned Adjudicating Authority has also ordered for recovery of interest and imposition of equivalent penalty. The Appellants had procured several inputs of iron & steel. The procurement and utilization of the said goods within the factory of the Appellants is not in dispute and the said goods were duly accounted for in the books of the Appellants. The said items were utilized by the Appellants for installation and fabrication of various capital goods and structural support thereof. The total quantity procured was 10,201.79MT and out of which only on 2903.90 MT CENVAT Credit was availed and on remaining quantity of goods credit was not taken as the same were used in civil structure. The detail of the credit taken on items was also furnished with the ER-1 returns filed regularly. These technological structures were intended to provide support to the various capital goods installed in the factory, to hold them firmly and were essential for functioning of these machineries, thus, becoming integral parts of the capital goods. The Appellants got the said capital goods and structures fabricated through contractors using the aforesaid steel items for support structures like conveyer transport system, clinker silo, cement silo, gypsum crusher, fly ash silo, cement mill, packing plant, etc. The Appellants were availing the Excise Appeal No.50913 of 2014 3 Excise Appeal No.50914 of 2014 Excise Appeal No.50915 of 2014 benefit of credit on the said items obtained by it on grounds of their utilization in the manner provided hereinabove.
2. The show cause notice proposed denial of CENVAT Credit based on the ground that the Larger Bench of the Tribunal in the case of Vandana Global reported at 2010 (253) E.L.T. 440 (Tri.-
LB) held that credit is not admissible after Explanation 2 was amended vide Notification No.16/2009-C.E. (N.T.), dated 07.07.2009 by inserting the words "but shall not include cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bar (TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods."
3. The learned Adjudicating Authority vide the impugned Order-in-Original has denied the credit to the Appellant on supporting structures for different capital goods and machineries and passed the order as under:-
"(i) I confirm the demand of Rs.1,44,70,167/- (Rs. One Crore Forty Four Lakhs Seventy Thousand One Hundred & Sixty Seven only) representing the amount of inadmissible Cenvat credit availed by M/s Ultra Tech Cement Ltd. (Unit Dadri Cement Works) Village Ranauli Latifpur, Vidyut Nagar, Gautam Budha Nagar (U.P.) on iron and steel materials which were not capital goods under the provisions of the Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A(1) and proviso thereof, of the Central Excise Act, 1944 along with interest payable under Section 11AB (now Section 11AA) of the Central Excise Act, 1944 in respect of above referred demand. I also order to appropriate Rs.5,746/- already debited by M/s Ultra Tech against the said demand.
(ii) I impose a penalty of Rs.1,44,70,167/- Rs. One Crore Forty Four Lakhs Seventy Thousand One Hundred & Sixty Seven only) upon M/s Ultra Tech Cement Ltd. (Unit Dadri Cement Works) Village Ranauli Latifpur, Vidyut Nagar, Gautam Budh Nagar (U.P.) under Rule 15(2) of the Excise Appeal No.50913 of 2014 4 Excise Appeal No.50914 of 2014 Excise Appeal No.50915 of 2014 CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944.
(iii) I impose a penalty of Rs.5,00,000/- (Rs. Five lacs only) upon Shri Shyam Bihari Maheshwari, Deputy Manager (F & C), H.O.D. Commercial and authorized signatory of M/s Ultra Tech Cement Ltd. (Unit Dadri Cement Works) Village Ranauli Latifpur, Vidyut Nagar, Gautam Budh Nagar (U.P.) under Rule 26 of the Central Excise Rules, 2002.
(iv) I impose a penalty of Rs.10,00,000/- (Rs. Ten Lacs only) upon Shri Piyush Raj, Vice President (Tech.) and Unit Head of Dadri Cement Works of M/s Ultra Tech Cement Ltd. Village Ranauli Latifpur, Vidyut Nagar, Gautam Budh Nagar (U.P.) under Rule 26 of the Central Excise Rules, 2002."
Hence the present appeals before the Tribunal.
4. Heard both sides and perused the appeal records.
5. We find that the show cause notice has been issued mainly based on the decision of Vandana Global (supra) and the same has been categorically overruled by Hon'ble Chhattisgarh High Court vide its Order reported at 2018 (16) G.S.T.L. 462 (Chhattisgarh). The Hon'ble High Court has given a specific finding against the finding of retrospective operation of the amendment to the explanation to Rule 2(k) of Cenvat Credit Rules holding that the said amendment will not be retrospectively applicable. Further, the said finding of the learned Adjudicating Authority is in violation of a catena of decisions of several High Courts and Supreme Court allowing the admissibility of credit on inputs used in the fabrication of support structures of capital goods.
6. We find that the jurisdictional High Court also accepted the view that the decision in Vandana Global (supra) was not a good law. [CCE, Lucknow vs. Mankapur Chini Mills 2019 (367) E.L.T. 889 (All.)] The Hon'ble High Court held as follows:-
"32. On going through the record, we find that the Revenue has relied upon the Larger Bench decision of the Excise Appeal No.50913 of 2014 5 Excise Appeal No.50914 of 2014 Excise Appeal No.50915 of 2014 Tribunal in the case of Vandana Global (supra), wherein it was held that the Explanation added to the definition of capital goods w.e.f. 7-7-2009 has to be held as explanatory and thus retrospective in nature. The said decision of the Tribunal was considered by the Hon'ble Gujarat High Court in the case of Mundra Ports & Special Economic Zone Ltd. (supra), wherein the said decision was not approved by the Hon'ble High Court and observed that the amendment made on 7-7-2009 cannot be held to be clarificatory and as such would be applicable only prospectively.
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35. In view of above settled position of law, since items used by the respondent-assessee were used as structure to hold the capital goods, hence, it is wrong to say that respondents are not eligible to Cenvat credit. Therefore, in our considered opinion, the Tribunal has rightly allowed the appeal and the reasoning given by Tribunal cannot be said to be not cogent or correct appreciation of evidence on record."
7. Similar issue came up for consideration before Hon'ble Gujarat High Court in the case of Mundra Ports & Special Economic Zone Ltd. vs. CCE reported at 2015 (39) S.T.R. 726 (Guj.) and before Hon'ble Madras High Court in the case of India Cements Ltd. vs. CESTAT, Chennai, 2015 (321) E.L.T. 209 (Mad.) wherein it was held that the exclusion incorporated in Explanation 2 to Rule 2(k) of the Credit Rules w.e.f. 07.07.2009 cannot be given retrospective effect thereby effectively holding that the finding in Vandana Global (supra) is erroneous.
8. We further find that the Tribunal in the case of Singhal Enterprises Pvt. Ltd. vs. Commr. Of Cus. & C. Ex., Raipur reported at 2016 (341) E.L.T. 372 (Tri.-Del.) held that the steel items have been used for the fabrication of support structures for capital goods. The capital goods utilized by the manufacturers cannot be suspended in mid-air and hence the same require to be suitably supported to facilitate smooth Excise Appeal No.50913 of 2014 6 Excise Appeal No.50914 of 2014 Excise Appeal No.50915 of 2014 functioning of such machines. Hence, the goods fabricated were held to be parts of the relevant machines. Applying the "User Test", the Tribunal allowed the credit to be availed on such steels items utilized for fabrication purpose even for period subsequent to the amendment mentioned hereinabove. The said decision of the Tribunal was upheld by Hon'ble Chhattisgarh High Court reported at 2018 (359) ELT. 313 (Chhattisgarh). Similarly, reliance is placed on the decision of the Tribunal in the case of Prism Cement Unit-II v. CCE & ST, 2016-TIOL-3261-CESTAT- DEL. Hon'ble Supreme Court in the case of CCE v. Rajasthan Spinning & Weaving Mills Ltd. reported at 2010 (255) E.L.T. 481 (S.C.), by applying the user test, held that credit availed on steel items for fabrication of Chimney was admissible.
9. Following the aforesaid user test, in several cases, Cenvat credit on the steel items used for fabrication of capital goods and support structures has been allowed. Some of these cases are as under:-
Mangalam Cement Ltd. vs. CCE, Jaipur-I, Interim Order No.14/2018 dated 05.03.2018 reported at 2018 (260) E.L.T. 737 (Tri.-LB).
SKS Ispat and Power Ltd. vs. CCE, Raipur, 2016-TIOL- 2769-CESTAT-DEL.
Ultratech Cement Ltd. vs. CCE, Indore, 2016-TIOL-3000- CESTAT-DEL.
10. The availment of credit on PSC poles is covered by the decision of Hon'ble Rajasthan High Court in the case of Aditya Cement vs. UOI reported at 2008 (221) E.L.T. 362 (Raj.). It has been held that the railway track material used for transporting of coal and products of cements are eligible for credit as without supply of fuel the plant does not function. Thus, the railway track cannot be kept out of the consideration for availing credit, though, such material was not being used directly in the manufacture of cement.
11. In such situation, imposition of penalty is also not sustainable on the main as well as the other Appellants.
Excise Appeal No.50913 of 2014 7 Excise Appeal No.50914 of 2014 Excise Appeal No.50915 of 2014
12. In view of the above discussion impugned order cannot be sustained and is accordingly set aside and the appeals filed by the Appellants are allowed with consequential relief, as per law.
(Operative part of the order pronounced in open court) Sd/-
(P.K. CHOUDHARY) MEMBER (JUDICIAL) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) LKS