Custom, Excise & Service Tax Tribunal
Excise-1121-Of-2012 on 7 October, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SCO 147-148, SECTOR 17-C, CHANDIGARH-160 017
COURT NO.1
Appeal No. E/1121 & 1145/2012- (SM)
[Arising out of the, Order-in-Appeal No.16/CE/APP/CHD-II/2012 dated 25.01.2012, passed by the CCE (Appeals), Chandigarh-II)
Date of Hearing : 30.09.2016
Date of Decision:
For Approval & signature:
Honble Mr. Ashok Jindal, Member (Judicial)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3. Whether their Lordships wish to see the fair copy of the order?
Seen
4. Whether order is to be circulated to the Department Authorities?
Yes
Nectar Lifesciences Ltd. Assessee
Vs.
CCE, Chandigarh-II Revenue
And
CCE, Chandigarh-II Revenue
Vs.
Nectar Lifesciences Ltd. Assessee
Appearance
Sh. Suhir Malhotra, Sh. Sudeep Singh, Advocates- for the Assessee
Sh. V.Gupta, AR- for the Revenue
CORAM: Honble Mr. Ashok Jindal, Member (Judicial)
FINAL ORDER NO.61498-61499/2016
Per Ashok Jindal:
Both sides are in the appeal.
2. The facts of the case are that the assessee is engaged in the manufacture of excisable goods. An audit was conducted on 13.11.2009 and it was alleged that the assessee has wrongly availed cenvat credit of Rs. 18,33,204/- on inputs namely CAF, Jointing Sheet, Aluminium Coil, CR Strips, Plate, Chequered Plate, MS Angles, Bars, Ms Channel, Sheets, Plate, Joist, HR Coil, Structures, Shape and sections, clamps, SS Rocks/Trays/Aluminium Sheets, Well glass and pre fabricated building under the Category of capital goods as per Rule 2 (a) (A) of the Cenvat Credit Rules, 2004 and Cenvat credit of Rs. 21,38,799/- on inputs namely SS Sheets, SS Plates, Corrugated Steel Sheets, SS Coils, SS Plates, SS Channels, MS Beam, MS Angle, Sheet, Joist, Plate, Bars, HR Coil, Shape and section under the category of inputs as per Rule 2(K) of the Cenvat Credit Rules, 2004. It was alleged that these inputs were used in the manufacture of structures, capital goods, parts, accessories and components of capital goods, used for joining pipes in the plants, welding etc.. The adjudicating authority confirmed the demand along with interest and equivalent amount of penalty was also imposed relying on the decision of the Honble Larger Bench of CESTAT in the case of Vandana Global Ltd. Vs. CCE reported in 2010 (253) ELT 440 (T-LB).
3. On appeal before the Ld. Commissioner (A) confirmed the demand on inputs on which credit has been taken as per Rule 2(k) of the Cenvat credit Rules, 2004 relying on the decision of Vandana Global Ltd. (Supra) but he allowed cenvat credit on inputs used in fabrication of storage tanks holding that inputs used do not fall in the exclusion list of revised definition of inputs. Aggrieved from the said order of the Ld. Commissioner (A), both sides are in the appeal before this Tribunal.
4. The Ld. Counsel for the assessee submits that the period involved in this case in August 2006 to December 2008 and the issue of admissibility of cenvat credit on inputs used in manufacture of structure, capital goods, parts, accessories and components of capital goods, used for joining pipes in the plants, welding etc. with the factory of production. He submits that during the impugned period the assessee was entitled to take of all the inputs on which cenvat credit sought to be denied. As the amendment in the Rule 2(a)(A) of the Cenvat credit Rules, 2004, and definition of inputs changed under Rule 2(k) tookplace w.e.f 07.07.2009 vide Notification No. 16/2009-CE (NT) dated 07.07.2009. He further submits that the authorities below had relied on the decision of the Honble Larger Bench of this Tribunal in the case of Vandana Global Ltd. (Supra) which states that the explanation 2 to Rule 2(k) w.e.f. 07.07.2009 is clarificatory in nature and retrospectively applicable. The said decision is not a correct law as held by the Gujarat High Court in the case of Mundra Ports and Special Economic Zone Ltd. reported 2015 (39) STR 726 (Guj). Further, in the case of Rajasthan Spinning and Weaving Mills ltd. the Honble Apex Court reported in 2010 (255) ELT 481(SC). Further, in the case of Indian Cement Ltd., the Honble Madras High Court reported in 2015 (321) ELT 209 (Mad) held that MS Rods, Sheets, Ms Channels etc. used for fabrication of structure, capital goods eligible for cenvat credit. He also relied on the decision on this Tribunal in the case of Singhal Enterprises Pvt. Ltd. reported in 2016-TIOL-2451-CESTAT-Del holding that user test is to be applied for structural items used in the fabrication of support structures and the same would fall within the ambit of capital goods as contemplated under Rule 2(k) of the Cenvat Credit Rules, 2004. Therefore, he is entitled to take cenvat credit. Accordingly, the impugned qua, deny the cenvat credit is to be set aside.
5. On the other hand, the Ld. AR supported the decision of the Honble Larger Bench in the case of Vandana Global Ltd. (Supra).
6. Heard the parties and considered the submissions.
7. The short issue is involved in the matter is that whether on the steel items, the assessee is entitled to take cenvat credit used in manufacture of structure, capital goods, parts, accessories, components of capital goods used for joining pipes in the plants, welding etc. with the factory of production or not for the period August 2006 to December2008.
8. The main thrust of the Revenue is that the decision of Vandana Global Ltd. (Supra) held that amendment dated 07.07.2009 is clarificatory in nature and retrospectively applicable.
9. I have seen that prior to 07.07.2009, the input under Rule 2(k) was defined as under:
2(k) Input means:
(i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final product cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity of steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production.
(ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service;
W.e.f. 07.07.2009 the Explanation 2 Rule 2(k) amended and it reads as under:
Explanation 2. Input include goods used in manufacture of capital goods which are further used in the factory of the manufacture [but shall not include cement, angles, channels, Centrally Twisted Deform bar (CTD) of 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.
Further, w.e.f 01.04.2011 which rules as under:
2(K) input means-
(i) all goods used in the factory by the manufacturer of the final product; or
(ii) any goods including accessories, cleared along with the final product, the value of which is included in the value of the final product and goods used for providing free warranty for final product; or
(iii) all goods used for generation of electricity or steam for captive use; or
(iv) all gods used for providing any output service; but excludes (A) light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol;
(B) any goods used for
(a) construction or execution of works contract of a building of a civil structure or a part thereof; or
(b) laying of foundation or making of structures for support of capital goods, except for the provision of service portion in the execution of a works contract or construction service as listed under clause (b) of section 66E of the Act;
(C) capital goods except when used as parts or components in the manufacture of a final product;
10. On going through above definition, I find that the decision of the Honble Larger Bench this Tribunal held that amendments are clarificatory nature but the said decision of this Tribunal has been considered by various High Courts and observed as under:
The Honble Supreme Court in the case CCE Vs. Rajasthan Spinning and Weaving Mills Ltd. 2010 (255) ELT 481 (SC) held that cenvat credit on Steel Plates, MS channels used in fabrication of parts of capital goods admissible.
The Honble Gujrat High Court in the case of Mundra Ports and Special Economic Zone Ltd. Vs. CCE 2015 (39) STR 726 (Guj) held that Larger Bench view in Vandana Global Ltd. that intention of legislature behind amendment was to clarify the provisions was based on conjectures and surmises.
The Honble Calcutta High Court in the case of Surya Allow Industries ltd. Vs. UOI 2014 (305) ELT 47 (Cal) held that Larger Bench decision in case of Vandana Global Ltd. is no longer a good law.
The Honble Madras High Court in the case of India Cement Ltd. Vs. CESTAT, Chennai 2015 (321) ELT 209 (Mad) held that MS Rods, Sheets, MS Channels, MS Plate, Flat etc. used for fabrication of structure, capital goods eligible for cenvat credit.
The Honble Chhattishgarh High Court in case of Ambuja Cements Eastern Ltd. Vs. CCE 2010-TIOL-309-HC-Chhattisgarh-CX held that welding electrodes used in repairs and maintenance of plant and machinery are inputs, entitled for cenvat credit.
12. Further, I find that in the case of Singhal Enterprises Pvt. Ltd. (Supra) this tribunal held that user test is to be applied for structural items used for fabrication of support structure and the same would be fall within the ambit of capital goods as contemplated under Rule 2(a) (A) of the CCR, 2004, therefore, the cenvat credit of duty paid on welding electrodes was allowed.
13. Following the above said decisions, I hold that as the period involved in the matter is that prior to 07.07.2009, therefore, the amended definition of input w.e.f. 07.07.2009 is not applicable to the facts of this case. Therefore, the assessee has rightly availed cenvat credit on inputs in question.
With these terms, the appeal filed by the Revenue is dismissed and the Appeal filed by the assesse is allowed.
(To be pronounced on )
Ashok Jindal
Member (Judicial)
rt
2
E/1121 & 1145/2012
Nectar Lifesciences Ltd. Vs. CCE, Chandigarh-II
CCE, Chandigarh-II Vs. Nectar Lifesciences Ltd. Unit Ii