Custom, Excise & Service Tax Tribunal
Andhra Pradesh Paper Mills Ltd vs Cce, Visakhapatnam on 1 January, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench SMB Court I Appeal No.E/396/2012 (Arising out of Order-in-Appeal No.32/2011(V-II)CE dt. 22/11/2011 passed by CC,CE&ST(Appeals), Visakhapatnam) For approval and signature: Honble Ms. Sulekha Beevi, C.S., Member(Judicial) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? Andhra Pradesh Paper Mills Ltd. ..Appellant(s) Vs. CCE, Visakhapatnam ..Respondent(s)
Appearance Shri C. Saravanan, Advocate for the appellant.
Shri Prasad, Authorised representative for the respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Date of Hearing:01/01/2016 Date of decision:01/01/2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The appellant is aggrieved by the disallowance of credit on MS items used for manufacture of components, spares and accessories of capital goods.
2. The appellants are engaged in the manufacture of paper and paper board and are registered with the Central Excise Department. They are also availing CENVAT credit on inputs capital goods and input services. On scrutiny of ER1 returns for the period January 2010 to September 2010, it was found that the appellant had taken CENVAT credit on certain ineligible items of capital goods i.e. MS items falling under Chapter 73 of Central Excise Tariff Act, 1985 which do not conform to the definition of capital goods as provided in CENVAT Credit Rules, 2004. A show-cause notice was issued proposing the recovery of CENVAT credit along with interest and imposition of penalty. After adjudication, the demand along with interest was confirmed and penalty was imposed. The impugned goods on which credit was taken was confiscated with an option to pay fine of Rs.1000/- in lieu of confiscation. The appellants filed appeal before the Commissioner(Appeals) who modified the order to the extent of allowing credit availed on item viz. Disc Refiner Plate. The credit availed on other items was disallowed. Being aggrieved, the appellants are before the Tribunal.
3. The learned counsel appearing for the appellant argued that the MS items were used for various parts/accessories of capital goods. He submitted that the usage of the MS items for accessories/parts of capital goods was described by the appellant in the table furnished. He also relied upon the decision in the case of India Cements Ltd. Vs. CESTAT, Chennai [2015(321) ELT 209 (Mad.)].
4. Per contra, the learned AR Shri Prasad reiterated the findings in the impugned order and submitted that the appellant has not established the usage and the manner in which the MS items have been used in and in relation to the manufacture of final products. It is not clear in what type of capital goods the parts and accessories made using MS items formed part of it. He pleaded that the Commissioner(Appeals) after considering the evidence placed by the appellant has allowed the credit on Disc Refiner Plate. The credit on other MS items has been rightly rejected because the appellant did not furnish any evidence with regard to the use of these items.
5. I have considered the rival submissions and perused the records carefully. The Commissioner(Appeals) has observed as under:-
On the other hand, the adjudicating authority observed that the appellants did not submit any specifics such as the place and the function of the impugned goods. I have seen the case laws relied on by the appellants. I find on perusal of the annexure to the notice that the demand is on items such as Belot Dorfinor, Disc Refiner Plate, Sheet SS, Plate MS, Wire (Top SS), GI Grating Len, Tackles, 24 Refiner Segment, Wire. In respect of item viz. Disc Refiner Plate, in Appeal No.13/2010(V-II)CE vide Order-in-Appeal No.22/2010(V-II)CE dt. 29/09/2010, passed by me, I examined discussed and allowed the appeal and the order-in-Original passed by the adjudicating authority was set aside. In this case also, I allow the appeal to the extent of item viz. Disc Refiner Plate as appealed for. As regards to other items on which CENVAT credit availed by the appellants during the impugned period, I find from the above statement furnished by the appellants about the purpose and place of usage vide enclosure to the grounds of appeal that the manner in which these items are used by the appellants in their factory premises does not disclose the same to be capital goods entitled to avail credit under the CENVAT Credit Rules and hence credit is inadmissible. Further the appellants failed to prove that these impugned goods used in plant & machinery are nothing but the spares/component/accessory of the machinery and what is the contribution of these goods in the manufacture of their final products.
6. On examination of records, I do not find any evidence adduced by the appellants about the manner in which the MS items have been used though they contented it to be used in the parts and spares of capital goods. There is no certificate of a Chartered Engineer authenticating the manner and the purpose for which the MS items have been used. The learned counsel for the appellant pleaded that they will be able to produce the Chartered Engineer certificate to establish their case. Taking account of this plea and also the judicial precedent which has held that MS items used for manufacture of capital goods, spares/accessories is eligible for credit, I deem it fit to remand the matter to the original authority for de novo adjudication. The appellant will be given an opportunity to furnish a Chartered Engineer certificate and other documents if any available to establish their case. The original authority shall adjudicate the matter in the light of the Chartered Engineer certificate and documents if any produced by the appellant. In the result, the impugned order is set aside and the appeal is allowed by way of remand.
(Operative portion of this order was pronounced in court on conclusion of the hearing) SULEKHA BEEVI C.S. MEMBER(JUDICIAL) Raja.
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