Custom, Excise & Service Tax Tribunal
Ncl Industries Ltd vs Commissioner Of Customs, Central ... on 17 November, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH REGIONAL BENCH HYDERABAD Appeal(s) Involved: E/524/2009-SM [Arising out of Order-in-Original No. 04-2009CE(Commr) dated 26/02/2009 passed by CC,CE&ST, Guntur] For approval and signature: HON'BLE MS. SULEKHA BEEVI C.S, JUDICIAL MEMBER 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 Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? NCL INDUSTRIES LTD KADIMPOTHAVARAM (V), PINAPAKA (PO), G.KONDURU (M), KRISHNA DIST Appellant(s) Versus Commissioner of Customs, Central Excise and Service Tax GUNTUR NULL P.B.NO. 331...C.R.BUILDING, KANNAVARI THOTA, GUNTUR, - 520004 ANDHRA PRADESH Respondent(s)
Appearance:
Shri G. Prahlad, Advocate For the Appellant Shri Nagaraj Naik, Deputy Commissioner(AR) For the Respondent Date of Hearing: 17/11/2016 Date of Decision: 17/11/2016 CORAM:
HON'BLE MS. SULEKHA BEEVI C.S, JUDICIAL MEMBER Final Order No. 31221 / 2016 Per : SULEKHA BEEVI C.S The appellants are engaged in the manufacture of cement and are availing the facilities of CENVAT credit of duty paid on inputs and capital goods. During the scrutiny of modvat returns, it was observed by the Department that appellants have availed irregular credit on MS plates, MS angles, channels, steel tubes, rebars, pastable items, ceramic tiles etc. A show-cause notice was issued proposing to recover credit of Rs.33,16,916/- covering the period October 2007 to June 2008 and also proposing to impose penalties. After due process of law, the original authority confirmed the demand, interest and imposed equal amount of penalty besides ordering confiscation of the subject items used for fabrication and thus imposed redemption fine of Rs.50 lakhs. Being aggrieved, the appellants are now before the Tribunal.
2. On behalf of the appellant, the learned counsel Shri G. Prahlad explained that the MS plates, angles, channels, steel tubes etc. were used for fabrication of capital goods / parts / components. That appellants had furnished Chartered Engineers certificate, in which the details of the MS items and purpose for which they were used within the factory was explained. He submitted that the MS angles channels etc. were used for silo erection, stock pile, dump hopper, cement mills, packing plant, airline work etc. and also for laying railway sidings inside and outside the factory. The adjudicating authority has disallowed the credit on MS items observing that the subject items are used for construction of sheds and support structures which is factually wrong. He also submitted that railway sidings are used by appellant for inward transportation of inputs and outward transportation of finished goods connecting the factory to the railway station. That without such railway tracks, the transportation of bulk quantity of goods is not possible and therefore it is integrally connected with the process of manufacture. The learned counsel fairly conceded that an amount of Rs.13,076/- is availed by the appellant on ceramic tiles which is not eligible for credit. The appellant placed reliance on the following judgments to contend that the credit on subject items used for fabrication of capital goods / parts / accessories / components as well as railway sidings is eligible for credit:-
a. Binjusari Sponge & Power Pvt. Ltd. Vs. CCE, Hyderabad-III [2016-TIOL-1058-CESTAT-HYD] b. Concast Ferro Inc Vs. CCE, Visakhapatnam-I [2016-TIOL-1059-CESTAT-HYD] c. Srinathji Ispat Ltd. Vs. CCE, Ghaziabad [2016(333) ELT 454 (Tri. Del.)] d. Mundra Ports & SEZ Ltd. Vs. CCE [2015(39) STR 726 (Guj.)] e. India Cements Ltd. Vs. CESTAT, Chennai [2015(321) ELT 209 (Mad.)] f. CCE&C, Visakhapatnam-I Vs. Rashtriya Ispat Nigam Ltd. [2011(267) ELT 311 (AP)] g. CCE&ST Vs. India Cements Ltd. [2014(310) ELT 636 (Mad.)] h. Sanghvi Forging & Engineering Ltd. Vs. CCE, Vadodara-II [2014(302) ELT 136 (Tri. Ahmd.)] i. CCE, Mumbai Vs. Shree Chhatrapati Shahu Co-op Sugar Factory Ltd. [2006(206) ELT 697 (Tri. Mumbai)] j. J.K. Udaipur Udyog Ltd. Vs. CCE, Jaipur-II [2002(147) ELT 996 (Tri. Del.)] k. Commissioner Vs. J.K. Udaipur Udyog Ltd. [2005(183) ELT A159 (SC)] l. Diamond Cement Vs. CCE, Bhopal [2005(191) ELT 702 (Tri. Del.)]
3. On behalf of the Department, learned AR Shri Nagaraj Naik reiterated the findings in the impugned order. He adverted to para 22 of the impugned order wherein the Commissioner has discussed the eligibility of the credit on subject items. He pointed out that the railway sidings laid outside the factory are not eligible for the credit.
4. I have heard both sides. On perusal of the records, it is seen that the subject items were used for silo erection, pile stock, packing plant erection, cement mill etc. which are capital goods used in manufacture and integrally connected with the process of manufacture. The Commissioner has observed that these are sheds used for storage of inputs, like chemicals etcthe definition of capital goods include storage tanks. Such storage of inputs, raw material, finished product, waste etc. is necessary to carry out the activity of manufacture. The Chartered Engineer certificate certifies that the capital goods manufactured using the subject items are essential for carrying out manufacturing activity of the appellant.
5. Another strong objection raised by the Department is with regard to the credit availed on railway sidings which are laid outside the factory premises. When the appellant uses railway sidings for the purpose of transportation, it has to be invariably laid outside the factory and connected to a railway station in order to facilitate the transportation of bulk quantities of inputs and final products. Needless to say that the railway sidings laid outside the factory are part and parcel of the facility for transportation provided inside the factory premises. The learned counsel has relied on the judgment laid in the case of CCE, Mumbai Vs. Shree Chhatrapati Shahu Co.Op. Sugar Factory Ltd. (supra) in which the pipes and fittings used for carrying spent wash (hazardous waste) from distilleries to compost yard, situated outside factory was held to be part and parcel of the pollution control system and has to be treated as capital goods. The credit was held to be admissible. The Tribunal in the said case observed that pipeline fittings within the factory and outside the factory cannot be segregated but has to be treated as one entity as it situates within the factory premises itself.
6. In J.K. Udaipur Udyog Ltd. Vs. CCE, Jaipur-II (supra), the Tribunal had occasion to consider whether the ropeway used outside the factory for the purpose of transferring the crushed limestones from the mines located 5.8 kms. from the factory is capital goods and whether the credit is admissible. The said issue was held in favour of the assessee by the Tribunal. The appeal filed by the Department before the Honble Apex Court was dismissed vide judgment reported in 2005(183) ELT A159 (SC) whereby the Honble Apex Court maintained the decision passed by the Tribunal. In Jaypee Bela Plant Vs. CCE, Bhopal [2005(180) ELT 31 (Tri. Del.)], the issue was whether the pipeline used for drawing water from reservoir situated 5-6 kms away from the factory for manufacturing of final goods within the factory was eligible for credit. The issue was answered in favour of the assessee.
7. From the discussions and observations made in the above judgments as well as the facts presented before me, I am of the view that the credit availed on railway sidings is eligible. It has also to be pointed out that without the railway sidings being laid outside the factory so as to connect the factory with a railway station, no purpose would be served.
8. The appellant has availed credit of Rs.13,076/- on tiles which the learned counsel has conceded to be not eligible. I hold the same inadmissible and disallowed.
9. From the foregoing discussions, I hold that the appellant is eligible for credit availed on MS items, angles etc. The impugned order is modified to the extent allowing of the same. The credit availed on tiles i.e. Rs.13,076/- is disallowed and the same along with interest as well as equal amount of penalty to this amount of Rs.13,076/- is confirmed.
10. Appeal is partly allowed in above terms with consequential reliefs, if any.
(Pronounced and dictated in open court) SULEKHA BEEVI C.S JUDICIAL MEMBER Raja 7 1