Custom, Excise & Service Tax Tribunal
M/S Bhushan Steel Limited vs Cce, Ghaziabad on 7 May, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 07/05/2015. DATE OF DECISION : 07/05/2015. Excise Appeal No. 52173 of 2014 [Arising out of the Order-in-Original No. 20-21/Commr./GZB/ 2013-14 dated 21/01/2014 passed by The Commissioner, Customs, Central Excise & Service Tax, Ghaziabad.] For Approval and signature : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, 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 would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s Bhushan Steel Limited Appellant Versus CCE, Ghaziabad Respondent
Appearance Shri Rajesh Chhiber, Advocate for the Appellant.
Shri M.S. Negi, Authorized Representative (DR) for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial) Final Order No. 51598/2015 Dated : 07/05/2015 Per. Rakesh Kumar :-
The appellant company in their factories at Sahibabad (U.P.), Khopoli (Maharashtra) and Angul (Orissa) manufacture precision pipes of steel. The pipes manufactured by Sahibabad unit, Khopoli unit and Angul unit are cleared to various depots of the appellant company all over India. Each depot has Central Excise registration as a registered dealer. The present dispute in respect of Sahibabad unit. The duty paid pipes cleared by Sahibabad unit, Khopoli unit and Angul unit of the appellant to depots are sold from the depot under cenvatable invoices issued by the depots. The depots have registration as registered dealers. However, since, the pipes are sold on the basis of length, some end cuttings are left which are not saleable, these end cuttings of pipes are sent by the depots to Sahibabad unit under invoices issued by the depots as registered dealer. In these invoices, the concerned depots mention the proportionate duty paid in respect of pipes. The Sahibabad unit on receiving the end cuttings of pipes availed the Cenvat credit on the basis of these invoices and used these pipes for re-melting for manufacture of ingots. According to the Department, since while the pipes received by the depots had suffered duty on the value varying from Rs. 36/- to Rs. 42/- per kg., the depots, in the invoices issued for sending the end cuttings to the Sahibabad unit, had mentioned their value as Rs. 15/- per kg, the Cenvat credit available to the Sahibabad unit would be restricted only to the duty payable on the value mentioned in the invoices i.e. Rs. 15/- per kg. and not the duty originally paid in respect of the pipes at the time of their clearance from the respective factories. The Cenvat credit demand of Rs. 1,20,48,313/- against Sahibabad unit of the appellant company for which two separate show cause notices have been issued, is on this basis.
2. The second point of dispute is as to whether welding electrodes used for repair and maintenance of the plant and machinery of the Sahibabad unit are eligible for Cenvat credit. The department being of the view that welding electrodes used for repair and maintenance of the plant and machinery are not eligible for Cenvat credit and has sought to deny the Cenvat credit in respect of the same. The Cenvat credit demand of Rs. 1,12,070/- is on this basis.
3. The third point of dispute is regarding CI Slag pots which is sort of bucket which is used for taking out molten metal from the furnace. The appellant had taken capital goods Cenvat credit of Rs. 39,140/- in respect of this item, while according to this item is not covered by the definition of capital goods and, hence, is not eligible for Cenvat credit.
4. It is in view of the above that after issue of show cause notice, the Commissioner by order-in-original No. 20-21/Commr./GZB/2013-14 dated 21/01/14 has confirmed the Cenvat credit demand of Rs. 1,21,99,524/- (Rs. 1,20,48,313/- + Rs. 1,51,211/-) for the period from April 2008 to March 2013 against the appellant alongwith interest on it under Section 11AA and beside this, imposed penalty of equal amount on them under Section 11AC of Central Excise Act, 1944. Against this order of the Commissioner, this appeal has been filed.
5. Heard both the sides.
6. Shri Rajesh Chhibber, Advocate, the learned Counsel for the appellant, pleaded that so far as the Cenvat credit on CI Slag pot is concerned, the issue stands decided in favour of the appellant by the Tribunal vide judgment in the case of CCE, Delhi III vs. Jindal Strips Ltd. reported in 2000 (126) E.L.T. 631 (Tribunal), that as regards the Cenvat credit on the welding electrodes used for repair and maintenance of the plant and machinery, the issue stands decided in favour of the appellant by the judgments of three High Courts judgment of Honble High Court of Rajasthan in the case of Union of India vs. Hindustan Zinc Ltd. reported in 2007 (214) E.L.T. 510 (Raj.), the civil appeal against which has been dismissed by the Apex court vide judgment reported in 2007 (214) E.L.T. A115 (S.C.), judgment of Honble Karnataka High Court in the case of CCE, BAngulore I vs. Alfred Herbert (India) Ltd. reported in 2010 (257) E.L.T. 29 (Kar.) and the judgment of Honble Chhattisgarh High Court in the case of Ambuja Cement Eastern Ltd. reported in 2010 TIOL 309 HC Chhattisgarh CX., that in view of this, the denial of Cenvat credit in respect of welding electrodes used for repair and maintenance of the plant and machinery is not sustainable, that as regards the Cenvat credit demand of Rs. 1,20,48,313/- in respect of end cuttings received by the appellant unit from its depots for re-melting and manufacture of ingots, the end cuttings received by the Sahibabad unit from various depots are of the precision pipes which had been cleared by Sahibabad unit, Khopoli unit, Angul unit of the appellant company on payment of duty to depots and the depots under their invoices have sent the end cuttings to Sahibabad unit by passing on the proportionate credit, that there is no justification for re-calculation of the duty payable on the end cuttings of pipes on the basis of its scrap value, mentioned in the invoices and confirming the Cenvat credit to that amount, that in this regard he relies upon the judgment of the Apex Court in the case of Commissioner of Central Excise & Customs vs. MDS Switchgear Ltd. reported in 2008 (229) E.L.T. 485 (S.C.), wherein it has been held that the recipient manufacturer who has received the inputs from a supplier is entitled to avail the credit of the duty paid by the supplier manufacturer and Central Excise Authorities having jurisdiction over the recipient manufacturer cannot review the assessment of duty at the end of supplier manufacturer, that this judgment of the Apex court is squarely applicable to the facts of this case, more so, when the depots while transferring the end cuttings of pipes to Sahibabad unit have merely passed on the proportionate Cenvat credit of the duty suffered on that quantity of pipes. He, therefore, pleaded that the impugned order is not sustainable.
7. Shri M.S. Negi, the learned DR, defended the impugned order by reiterating the findings of the Commissioner in the impugned order.
8. We have considered the submissions from both the sides and perused the records.
9. As regards the first issue regarding eligibility of welding electrodes used for repair and maintenance of the plant and machinery for Cenvat credit, this issue stands decided in favour of the appellant by the judgments of Honble Rajasthan High Court in the case of Union of India vs. Hindustan Zinc Ltd. reported in 2007 (214) E.L.T. 510 (Raj.), civil appeal against which has been dismissed by the Apex court vide judgment reported in 2007 (214) E.L.T. A115 (SC), the judgment of Honble Karnataka High Court in the case of Alfred Herbert (India) Ltd. reported in 2010 (257) E.L.T. 29 (Kar.) and the judgment of Honble Chhattisgarh High Court in the case of Ambuja Cement Eastern Ltd. reported in 2010 TIOL 309 HC Chhattisgarh CX. Though Honble High Court of Andhra Pradesh in the case of Sree Rayalaseema Hi-Strength Hypo Ltd. vs. CCE, Tirupati reported in 2012 (278) E.L.T. 167 (A.P.) has taken a contrary view, since majority of the High Courts have held that welding electrodes used for repair and maintenance of plant and machinery are eligible for Cenvat credit, in our view it is these judgments of these High Courts which would hold the field. Therefore, we hold that the denial of Cenvat credit in respect of welding electrodes used for repair and maintenance of plant and machinery and Cenvat credit demand on this basis is not sustainable.
10. As regards the capital goods Cenvat credit in respect of CI Slag pot, this issue also stands decided in favour of the appellant by the judgment of the Tribunal in the case of CCE, Delhi III vs. Jindal Strips Ltd. reported in 2000 (126) E.L.T. 631 (Tribunal). In view of this, we hold that the denial of Cenvat credit in respect of this demand and Cenvat credit on this basis is not sustainable.
11. As regards the Cenvat credit demand of Rs. 1,20,48,313/- in respect of end cuttings of pipes received by the Sahibabad unit from various depots under the registered dealer invoices, we find that the various depots had transferred the end cuttings of pipes under invoices wherein the proportionate duty paid on the pipes at the time of clearance from their respective factories had been mentioned. The Department seeks to re-calculate this duty on the basis of the scrap value of the end cuttings, as mentioned in the depot invoices and restrict the Cenvat credit to that amount. In our view this stand of the Department is not correct in view of the Apex courts judgment in the case of Commissioner of Central Excise & Customs vs. MDS Switchgear Ltd. reported in 2008 (229) E.L.T. 485 (S.C.), wherein it has been held that the receiver manufacturer who had received the duty paid inputs from a supplier manufacturer is entitled to Cenvat credit of the duty paid by the supplier manufacturer and the Central Excise Authorities having jurisdiction for the recipient manufacturer cannot review the assessment of the duty at the end of the supplier manufacturer. In view of this, the Cenvat credit demand of Rs. 1,20,48,313/- is also without any basis.
12. In view of the above discussion, the impugned order is not sustainable. The same is set aside. The appeal is allowed.
(Dictated and pronounced in open court.) (Rakesh Kumar) Member (Technical) (S.K. Mohanty) Member (Judicial) PK ??
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