Custom, Excise & Service Tax Tribunal
) M/S.Tata Steel Ltd vs ) Cce, Jamshedpur on 23 September, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
1-7) Appeal Nos.EA-102, 394, 520/06, 233/10 & 199/11, 135, 136/10
Sl.No.1) (Arising out of Order-in-Original No.22/COMMR/2005 dated 30.11.2005 passed by the Commissioner of Central Excise, Jamshedpur.)
Sl.No.2) (Arising out of Order-in-Original No.05/COMMR/Bol/06 dated 28.03.2006 passed by the Commissioner of Central Excise, Bolpur.)
Sl.No.3) (Arising out of Order-in-Original No.12/Commr/BOL/06 dated 27.05.2006 passed by the Commissioner of Central Excise, Bolpur.)
Sl.No.4) (Arising out of Order-in-Appeal No.112/Bol/2008 dated 24.12.2008 passed by Commissioner of Central Excise(Appeals), Kolkata-IV.)
Sl.No.5) (Arising out of Order-in-Original No.76/COMMR/BOL/10 dated 28.12.2010 passed by Commissioner of Central Excise, Bolpur.)
Sl.No.6 & 7) (Arising out of Order-in-Appeal No.41 & 42/BOL/2009 dated 19.11.2009 passed by Commissioner(Appeal-IV), Central Excise, Kolkata.)
FOR APPROVAL AND SIGNATURE
HONBLE DR. D.M. MISRA, MEMBER(JUDICIAL)
HONBLE SHRI H.K.THAKUR, MEMBER(TECHNICAL)
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
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
1) M/s.Tata Steel Ltd.
2-5) M/s.SAIL, Durgapur Steel Plant
6 & 7) Commissioner of Central Excise, Bolpur
Applicant (s)/Appellant (s)
VERSUS
1) CCE, Jamshedpur
2-5) CCE, Bolpur
6 & 7) M/s.SAIL, Durgapur Steel Plant
Respondent (s)
Appearance:
Dr.Samir Chakraborty, Advocate & Shri Abhijit Biswas, Advocate for Appellant No.1-5.
Shri D.K.Acharya, Spl. Counsel for the Revenue CORAM:
Honble Dr. D.M. Misra, Member(Judicial) Honble Shri H.K.Thakur, Member(Technical) Date of Hearing :- 23.09.2015 Date of Pronouncement :- 05.01.2016 ORDER NO.FO/A/75016-75022/2016 Per Dr. D.M. Misra.
These seven appeals are filed against respective orders of the Commissioner of Central Excise, Bolpur/Jamshedpur and Commissioner of Central Excise(Appeals), Kolkata by the Appellants M/s Tata Steel(Appeal No. E/102/2006) & M/s SAIL(Appeal Nos.E-394, 520/06, 233/10 & 199/11) and Revenue(Appeal Nos.E-135-136/10), respectively. Since the issue involved in all these appeals are common, accordingly these are taken up together for hearing and disposal.
2. The facts involved in M/s.Tata Steel Ltd., are marginally different from the facts involved in other appeals filed by M/s.SAIL & also by the Revenue, hence, need to be stated separately.
2.1 In Tata Steels case, the facts in brief are that the appellant entered into correspondences with the Revenue beginning with their letter dated 08.10.2013, with a request to inform whether CENVAT Credit on rails and other track materials, namely, sleepers, paints and crossings etc. were eligible as inputs. Revenue responded through its letter dated 17.10.2003 informing that the goods in question do not merit inclusion in the category of inputs as the same do not go into the mainstream of the process of manufacture either directly or indirectly, nor included in the list of goods mentioned in the definition of Rule 2(g) of CENVAT Credit Rules, 2002. The appellant again requested through their letter dated 01.12.2003 pressing further that the definition of inputs as prescribed under Rule 2(g) of CCR,2002 allows credit on items used in or in relation to the manufacture of final product, whether directly or indirectly or whether contained in the final product or not; and since the rail track materials were used in their works for bringing raw materials and dispatching of finished excisable goods, accordingly CENVAT Credit on rails, sleepers, signal points, crossings etc. were eligible to CENVAT Credit. The department through its letter dt.17.12.2003 rejected the said contention and reiterated the stand taken by the Revenue in its letter dated 17.10.2003. Aggrieved by the said decision/communication, the appellant preferred a Writ Petition No.2463 of 2004 before the Honble Jharkhand High Court at Ranchi. The Honble High Court by its order dated 05.05.2006 dismissed their Writ Petition observing that no ground has been made out to interfere with the letter dated 17.12.2003.
2.2. In the meantime the department had issued a show cause cum demand notice on 11.01.2005 alleging irregular availment of CENVAT Credit amounting to Rs.1,05,38,425.64 on rails and sleepers as inputs and Rs.3,13,389/- as capital goods during the period January, 2004 to April, 2004, respectively. On adjudication, the total demand of Rs.1,08,51,815/- was confirmed with interest and equal amount of penalty imposed under section 11AC of the Central Excise Act, 1944 read with Rule 13 of CENVAT Credit Rules, 2002. Hence, the present appeal.
2.3. The facts relating to the appeals filed by M/s.SAIL (EA-394/06, 520/06, 233/10 & 199/11) are that the appellants had availed CENVAT Credit on rails falling under Chapter Sub-Heading 7302.10 claiming the same as input being utilised in the Railway Locomotive Network spread inside the factory/plant for convenient transportation of raw materials, semi-finished goods and other materials. The department issued show cause cum demand notices from time to time alleging that eligibility of CENVAT Credit on rails & other materials claiming as inputs was irregular since it was shown as fixed asset and not inputs in their respective Balance sheets. Also, the amount of credit claimed on rails was not eligible to credit as the same failed to satisfy the definition of capital goods contained in Rule 2(b)/2(a) of CENVAT Credit Rules, 2002/2004. In the case of Appeal No.E-394/06, the show cause notice was issued on 14.08.2003 for the period 01.04.2000 to 31.03.2003 invoking extended period of limitation, but in all other Appeals periodical demand notices were issued for the normal period. On adjudication, the demands were confirmed with interest and equivalent penalty imposed. Aggrieved by the said orders the present appeals.
2.4. The other two appeals bearing Nos.E-135 & 136/10 are filed by the Revenue challenging the order passed by the Commissioner of Central Excise(Appeals), who, by a common order disposed two Orders-in-Original holding that CENVAT Credit on rails are admissible. 3. The learned Sr. Advocate Dr.Samir Chakraborty appearing for the Appellants, namely, M/s.Tata Steel Ltd. and M/s.SAIL submitted that the dispute of eligibility to CENVAT Credit on the inputs/capital goods viz. rails, railway track materials is common to all the appeals and facts are more or less similar. He has submitted that rails and other materials such as sleepers, points and crossings used in laying of railway tracks for movement of material, handling equipments and also in the overhead cranes in the appellants respective steel works at Jamshedpur/Durgapur. These rails were used for movement of raw materials as well as finished products inside the factory premises, wherein dutiable iron and steel products were manufactured, hence eligible to CENVAT Credit as capital goods/inputs.
3.1 Further, elaborating the function of the railway tracks within the factory premises, learned Sr. Advocate has submitted that raw materials like Coal, Iron Ore, Lime Stones, Dolomites etc. are taken into the plants like Blast Furnace through rails. The Hot Metal i.e. liquid iron from Blast Furnace are carried to the Steel Melting Shop by the ladles through overhead crane rails system, which is spread throughout the plant. The liquid steel is poured in the ladle fitted on railway locomotives in which the very process of steel making takes place by adding various ferroalloys to attain the steel of the required quality. The process of top pouring takes place on the ingot moulds fitted on an open wagon through railway network and then such ingots are carried to the next process through rails and thus semi finished product from one mill to another mill and throughout the mills are carried by railway locomotives in open wagons through the railway network within the factory premises. Movement of intermediate and finished products (final product) from the manufacturing unit inside the factory to the plant yard in the factory from where they are to be cleared on payment of duty were carried out by using the said rail tracks. The Ld. Advocate placed 19 photographs showing the movement of raw material, intermediate and finished goods inside the factory premises.
3.2 It is his argument that the aforesaid functions imparted by using the rails are integrally connected to the process of manufacture and clearance of dutiable products within the factory, directly or indirectly and the present issue stands settled by the recent judgement of the Honble Supreme Court in the case of Jayaswal Neco Ltd. v. CCE 2015 (319) ELT 247(SC). It is his contention that even though the said judgement was in the context of Rule 57Q of erstwhile Central Excise Rules, 1944, the principles laid down therein are squarely applicable to CENVAT Credit Rules, 2002/2004, as schemes of MODVAT and CENVAT Credit are held to be not different by the Honble Supreme Court in Vikram Cement v. CCE 2006 (194) ELT 3 (SC). The ld. Advocate also placed reliance on the decision of Honble Rajasthan High Court in the case of Aditya Cement v. UOI 2008 (221) ELT 362(Raj.) wherein the credit on railway track materials was held to be admissible.
3.3 The ld.Advocate further submitted that the reliance placed by the Revenue on the judgment of Jharkhand High Court in their case in WP (T) No.2463/2004 is completely misplaced. He has argued that while disposing the SLP carried out against the said judgement of the Honble Jharkhand High Court, Honble Supreme Court has made it clear that the Tribunal shall decide the matter on merits uninfluenced by the observations made in the said judgement of the High Court. Further, he has submitted that the observations at para 12 & 13 of the judgement of the Honble Jharkhand High Court would not longer be considered as good law, in view of the findings of the Honble Supreme Court in Jayaswal Neco Ltd.s case (supra).
3.4 In respect of appeals filed by M/s.SAIL, challenging the contention of the Revenue that M/s.SAIL had declared and accounted the railway sleepers and rails as capital asset and consequently even though no depreciation might have been availed for the purpose of Income Tax on that part of the value representing Central Excise duty, the depreciation benefit having been enjoyed on the value of the rails, net of central excise duty, the claim for CENVAT Credit on inputs is to be disallowed, it is his contention that the Revenues allegation is not only factually erroneous, but also irrelevant in determining whether or not CENVAT Credit under the CENVAT Credit Rules is available in respect of the duty paid on the said goods. It is his contention that none of the input material involved, including rails have been capitalized. On the contrary, the same were reflected in the Expenditure part of the balance sheet of SAIL, under the heading Stores and Spares consumed. He has contended that in no balance sheet of a company, goods and materials are shown as capital goods. These are disclosed, in case they are so, as capital asset; the distinction between capital assets and capital goods has been explained by the Apex Court in the case of CCE v. Ginni Filaments Ltd. 2005 (181) ELT 145(SC).
3.5 Further he has submitted in view of the decision laid down by the Honble Supreme Court, High Court and the Tribunal, the said goods are inputs and/or capital goods, hence, eligible to the benefit of CENVAT Credit. It is his contention that to be called as inputs and eligible to CENVAT Credit under the CENVAT Credit Rules, except those specified in Rule 2(g)/2(k) of CENVAT Credit Rules, 2002/2004 and those which are capital goods as defined in Rule 2(b)/2(a) of CENVAT Credit Rules, 2002/2004, have to be, inter alia, used in or in relation to manufacture of final products whether directly or indirectly in the factory of the manufacturer. Hence, there is no requirement for the said goods to enter into the mainstream process of manufacture of final products in the factory. So long as it can be shown that the material used as inputs have a nexus, even indirect with a process, which is integrally connected with the ultimate production of the final product till they are fit for being put into marketing stream and such process is so integrally connected with the ultimately production of the final products that it would be commercially inexpedient to produce the finished goods without the process, all such inputs are eligible to benefit of CENVAT Credit. The transfer of raw materials and finished products and handling thereof for the purpose of such transfer is integrally connected with the process of manufacture. The railway tracks are and would be used in the operation of transfer of raw materials and finished product. Thus, they are used in or in relation to manufacture of final product and accordingly raw materials are eligible to CENVAT Credit as inputs under rule 2(g)/2(k) of CENVAT Credit Rules,2002/2004.
3.6 It is his contention that CENVAT Credit allowed on all goods covered by a Central Excise Tariff either as inputs or capital goods subject to the exceptions specified and fulfilment of conditions laid down under the CENVAT Credit Rules, it would be seen that except those goods which are defined as capital goods under Rule 2(b)/2(a) of CENVAT Credit Rules, 2002/2004 and thus specifically excluded from Rule 2(g)/2(k) of the CENVAT Credit Rules, 2002/2004, all goods which are used in or in relation to the manufacture of final products whether directly or indirectly, whether contained in the final product or not, are inputs. In support, he has referred to the decisions in the case of CCE v. Botliboi & Co.Ltd. 2010 (257) ELT 191(Guj.) and CCE v. Solaris Chemtech Ltd. 2007 (214) ELT 481(SC).
3.7 Further he has submitted that in any event, assuming though denying that the said goods cannot be treated as inputs, it is submitted that they are capital goods within the meaning of Rule 2(b)(iii) /Rule 2(a)(A)(iii) of the CENVAT Credit Rules,2002/2004. There is no dispute that the plant and machinery like blast furnace, converters and LD plants are goods falling under chapter 84 of First Schedule to the Central Excise Tariff Act, 1985. Thus, they are covered under the sub-clause (i) of Rule 2(b) or Rule 2(a)(A) of CCR,2002/2004 as accessories, therefore capital goods, and eligible to CENVAT Credit. The definition of accessories has been succinctly explained by the Honble Supreme Court in the case of CCE v. Insulation Electrical (P) Ltd. 2008 (224) ELT 512(SC). He has submitted that cranes classifiable under chapter 84 of CETA are undisputedly capital goods. The crane rails are used for movement of overhead crane in the shop. Hence, crane rails are accessories to such cranes and accordingly covered within the definition of capital goods. The Revenues reference to the decision of the Honble Supreme Court in the case of TISCO v. CCE 2005 (181) ELT 311 (SC) is misconceived and misplaced.
3.8 He has also submitted that it is also a settled principle of law that if the subject goods are inputs and the claim was advanced as capital goods and vice versa, the credit cannot be denied on that ground alone. In support he has referred to the decision of Larger Bench of this Tribunal in the case of CC & CE v. Modi Rubber Ltd. 2000 (119) ELT 197(T-LB), Raymond Ltd. v. CCE 2014 (300) ELT 317 (T), Krishna Sahkari Chini Mills Ltd.v. CCE 2010 (261) ELT 308(T), SAIL v. CCE, Raipur 2014 (311) ELT 709(Tri.-Delhi) and CCE v. Bhilai Steel Plant 2010 (261) ELT 612 (Tri.-Delhi),.
3.9 Further, referring to subsequent Orders-in-Appeal passed by the Commissioner of Central Excise(Appeals), Kolkata, the ld.Advocate submitted that rails the Ld. Commissioner(Appeals) had considered the same eligible to CENVAT credit. Also, he has submitted that recently, in adjudicating the periodical Show Cause Notices issued to M/s SAIL for the subsequent period i.e. from March 2008 to Oct.2014, the Ld. Commissioner of Central Excise, Ranchi, following the decision of Honble Supreme Court in M/s Jayaswal Neco Ltds case dropped the demands holding that railway track materials are eligible to CENVAT Credit vide Order-in-Original No.07-12/MP/Commr./RAN-II/2015-16 dt. 07.08.2015. Hence, in view of the decision of the Honble Supreme Court in the case of Birla Corporation Ltd. Vs. CCE 2005 (186) ELT 266(SC), Jayswal Neco Ltd. Vs. CCE,Nagpur 2006(195) ELT 142(SC), Indian Oil Corporation Ltd. v. CCE 2006 (202) ELT 37(SC), the Revenue cannot contend to the contrary, wherein for subsequent period in case of the same assessee or in relation to the case involving similar issue in case of any other assesse, the demands have been dropped.
4. Per contra, learned Special Counsel Shri D.K.Acharya for the Revenue submitted that before this Tribunal, now the Appellants have taken a diametrically opposite stand pleading that rails are capital goods and not inputs for the purpose of claiming CENVAT Credit on the same. It is his contention that the appellants approach is nothing, but taking recourse of a new ground which was not placed before the original authority, hence should not be considered. It is his grievance that this was also not placed before Honble Jharkhand High Court and being a new ground cannot be entertained ab initio in terms of Rule 5(2) and 5(3) of Central Excise (Appeals) Rules, 2001 read with CESTAT (Procedure) Rules, 1982. It is his contention that this ground was also not taken in their written memorandum of Appeal.
4.1 Elaborating his argument, the learned Special Counsel submits that before the original as well as before the Honble High Court the appellant argued that rails were inputs and accordingly, the adjudicating authority had passed a reasoned order rejecting their said plea. Further, the Honble Jharkhand High Court in its order dated 13.07.2006 went in to the contentions raised by the Appellant at great length and after considering the argument whether rails could be inputs, ultimately rejected the stand of the Appellant. It is his contention that this order of the Honble Jharkhand High Court has not been set aside by the Honble Supreme Court, but the Apex Court directed only that the matter be decided on merit by CESTAT without being influenced by the order dated 13.07.2006 of Honble Jharkhand High Court at Ranchi. It is his plea that this is because that Honble Jhakhand High Court order was not against any order of the lower authority, but against some letters of the Commissioners office stating that rails are not inputs. It is his argument that if the order of the Apex Court is literally interpreted then this Tribunal has to confine its analysis and findings as to whether rails in this case are inputs or capital goods or not.
4.2 The learned Special Counsel further submitted that even if rails are called as capital goods, as a financial concept or an accounting practice, the same are not necessarily eligible to CENVAT Credit of duty paid on capital goods as defined. Rails have various uses as mentioned in Chapter 73 of the CETA, for railways, tramways, switches, plates, crossings, tracks, fish-plates and sale plates etc.. These are classifiable under Tariff Item 7302. In Section Note 1(F) of Section XV of CETA,1985 these items are excluded from Section XVI i.e. machinery, appliances and electrical goods. Under CENVAT Credit Rules, 2002 or 2004 such rails of Chapter 73 are excluded from capital goods eligible to CENVAT Credit. It is his contention that in the CENVAT Credit Rules, 2002/2004, apart from general items like pollution control equipments, moulds and dice, refractory pipes, tubes and storage tanks, capital goods are those who are classifiable under Chapter 82, 84, 85, 90; some headings of Chapter 68 also included. Rails being under Chapter 73 are by definition (Section Notes) excluded from Section XVI i.e. Chapters 84 and 85 and also not covered by any of the items of Chapter 82 or 90; only railway track fixtures and fittings are covered by Chapter 86, but the said Chapter 86 is outside the benefit of CENVAT Credit as capital goods, under CENVAT Credit Rules, 2002 or 2004, hence, not eligible to CENVAT Credit.
4.3 The learned Special Counsel further submitted that the judgment of the Honble Supreme Court in Jaiswal Necos case relate to discussion on eligibility of railway track materials used for handling raw materials under Rule 57Q of the erstwhile Central Excise Rules, 1944. It is his contention that even though the said judgement is recent one, but in respect of an old matter arose in the light of interpretation of then existing Rule 57Q where definition of capital goods was very broad, open-ended and amenable to interpretation of wide amplitude. The legislative intention was make the definition more specific. Accordingly, by Notification No.14/96-CE(NT) dated 23.07.1996 the definition of capital goods became almost chapter specific except some general items. Thus, the very basis on which rail has been considered as eligible to credit as capital goods under Rule 57Q no longer exists due to major amendment in the Central Excise law in this regard initiated by 1996 and culminating to CENVAT Credit Rules, 2002 and finally CENVAT Credit Rules, 2004. Now, capital goods means as per CENVAT Credit Rules, 2002/2004, seven items and except some general items, like pollution control equipments, storage tank, refractories etc., include chapter specific goods under chapter 82, 84, 85, 90 and few items of Chapter 68 of CETA,1985.
4.4 With regard to the Appeals filed by M/s.SAIL, learned Special Counsel submitted that the rails were shown as capital assets in the balance sheet by the Appellant and claimed CENVAT Credit on the same as inputs. It is the Revenues stand that rails are neither inputs being not integrally connected with the manufacture of final products nor rails are capital goods within the definition of capital goods as prescribed under Rule 2(b)/ 2(a) the CENVAT Credit Rules, 2002/2004, hence not eligible to credit.
4.5 Further, the learned Special Counsel has submitted that the Commissioners order dated 07.08.2015 referred to by the Appellant was passed mainly relying on the judgement of the Honble Supreme Court in Jayaswal Neco Ltd.s case(supra) and few other cases in coming to the conclusion that rails are capital goods and eligible to CENVAT Credit without realizing that the appellants had been claiming CENVAT Credit for rails as inputs and not as capital goods; and secondly that the judgements referred to in the said order, wherein the context was interpretation of defunct Rule 57Q of erstwhile Central Excise Rule,1944 and now the present cases are in a different time zone and legal regime, hence not applicable. Further, he has submitted that rails have been utilized by M/s.SAIL in the railway locomotive network for movement of wagons and the rails are thus claimed as capital goods. It is his contention that the rails are classifiable under Chapter 73 of CETA and if rails are considered as components/accessories of locomotives which are classified under Chapter 86 of CETA, the said Chapter 86 is also excluded from the scope of definition of capital goods. It is his contention that if the rails are part of overhead crane system, the same are admissible to CENVAT Credit as capital goods, subject to production of necessary installation certificates/evidences.
5.1 Heard both sides at length and perused the records.
5.2 The issue involved in the present case centers around eligibility to CENVAT Credit on the items, namely, rails, sleepers, joints, crossings etc. used inside the factory in the railway net work for transportation of raw materials, semi-finished, finished goods and also in the overhead cranes. While claiming CENVAT Credit on these items, in the case of Appeal filed by M/s.Tata Steel Ltd., Rs.1,05,28,426/- was claimed as inputs and Rs.3,13,309/- as capital goods; whereas in the case of M/s.SAIL a total amount of Rs.3,43,55,640 was claimed as inputs and Rs.12,20,798/- as capital goods/-(in all the six Appeals). While recording reasons in denying CENVAT Credit, in M/s.Tata Steel Ltd.s case, the ld. adjudicating authority mainly anchored his reasoning on the stand taken by them before the Honble Supreme Court in their own case reported as 2005(181) ELT 301(SC) claiming exemption under a notification. In that case M/s Tata Steel Ltd. claimed that the locomotive, other machineries, the tracks and other transport equipment were covered by the expression machinery which were exclusively used within the factory for the purpose of carrying raw materials, semi-finished goods etc., and parts for maintenance of such tracks, would definitely qualify for exemption. In the present case, however, the appellant had changed their stand and claimed that these goods were used as inputs which led the adjudicating authority to conclude that this change of stand was only to avail undue CENVAT Credit and accordingly disallowed the CENVAT Credit on the rail and track materials.
5.3 While recording reasons in denying CENVAT Credit in the case of SAIL, the adjudicating authority had while denying credit observed that the applicant in their books of accounts shown these items as capital asset and not as an inputs, thus the goods being classifiable under Tariff Item No.7302.10 of CETA,1985 itself fall outside the scope of capital goods and were also not eligible as inputs. He disallowed credit on rails used on movement of cranes for want of sufficient evidence including installation certificates.
5.4 The ld.Commissioner (Appeals) in Appeal No.E-133-136/10, filed by the Revenue, while deciding the issue in favour of the assessee observed that in an earlier Order-in-Appeal, the benefit of CENVAT Credit on rails was extended to the assessee and the same was accepted by the department. Hence, for subsequent period the department cannot take a different stand and accordingly he has set aside the impugned orders of the original authority and allowed the appeal filed by the appellant-assessee.
5.5 On going through the orders impugned in the present appeals, we find that no serious analysis of the relevant provisions of the statute and the principle of law settled in this regard while disallowing or allowing the credit had been recorded. The ld. Sr. Advocate Dr. Chakraborty has vehemently argued that the principle of admissibility of CENVAT Credit on rail and railway track materials is no more res integra which has been settled by the Honble Supreme Court in the recent judgment of M/s Jayaswal Neco Ltd.s case (supra). It is his contention that since the Honble Apex Court has categorically held that CENVAT credit on the railway track materials are admissible, being essential and integrally connected to the process of manufacture of final products, even though the judgement relates to Rule 57Q of erstwhile Central Excise Rules, 1944, the principle laid down therein applicable even to the present cases under Cenvat Credit Rules,2002/2004. In support, he refers to the judgment of Honble Supreme Court in Vikram Cements case (supra) wherein their Lordships have held that there is no difference in the MODVAT and CENVAT Scheme. Challenging the said contention, the learned Special Counsel for the Revenue has submitted that the shortcomings in the erstwhile Rule 57Q had been done away with after the introduction of new set of Rules governing admissibility of CENVAT Credit on capital goods and inputs. The present definition of capital goods is restrictive and chapter specific in comparison to the earlier provisions. Besides, it is his contention that since the appellants have all along been claiming the CENVAT Credit on rails as inputs they should not be allowed to change their stand and claim the benefit as capital goods before this forum. This argument has also been rebutted by the learned Sr.Advcoate referring to the judgements of this Tribunal in Krishna Sahkari Chini Mills Ltd. & Bhilai Steel Plants case(supra), wherein it is observed that there is no bar in changing the claim of admissibility of CENVAT credit either as capital goods or as inputs at any stage of the proceeding. We find force in the contention of the Ld. Advocate for the Appellant, in view of the principle laid down in the above two cases that credit cannot be denied merely on the ground that the claims to CENVAT credit have been changed at the Appellate stage from inputs to capital goods and vice versa.
5.6 Before addressing the issues raised, it would be prudent to refer to the principle laid down by the Honble Supreme Court in Jayaswal Neco Ltd.s case. Their Lordships observed as:
14.?Applying the aforesaid test to the facts of this case, it is apparent that the use of railway tracks is related to the actual production of goods and without the use of the said railway track, commercial production would be inexpedient.
15.?In the instant case, the manner in which railway track materials have been used by the appellant was explained by the appellant before the Commissioner and veracity thereof was accepted by the Commissioner. Therefore, without any fear of contradiction, we may note the exact process that is involved :
These railway tracks used in transporting hot metal in ladle placed on ladle car from blast furnace to pig casting machine through ladle car where hot metal is poured into pig casting machine for manufacture of pig iron. Secondly the system also helps in taking hot pigs from pig casting machine to pigs storage yard by the big wagon where hot pig iron are dumped for cooling and making ready for dispatchers. This Railway tracks are also used in handling of raw materials at wagon tippler to stacker reclaimer where stacking and reclaiming of raw material is taken place and required quantity is conveyed for further processing at stock house.
16.?It reflects that the appellant has installed railway tracks within the plant which is a handling system for raw material and processed material.
17.?The aforesaid process squarely meets the test laid down by this court in M/s. J.K. Cotton Spinning & Weaving Mills Co. Ltd.s case. It is clear that the railway tracks are installed not only within the plant, but the main objective and purpose for which the capital expenditure on laying these railway tracks is incurred by the appellant is for transporting hot metal in ladle placed on ladle car from blast furnace to pig casting machine through ladle car where hot metal is poured into pig casting machine for manufacture of pig iron. It is clear from the above that the use of railway tracks inside the plant not only form the process of manufacturing, but it is inseparable and integral part of the said process inasmuch as without the aforesaid activity for which railway tracks are used, there cannot be manufacturing of pig iron(emphasis supplied). 5.7. On the applicability of the aforesaid principle, to the facts and circumstances of the present set of Appeals, Dr.Samir Chakraborty, ld. Sr.Advocate argued that following the aforesaid judgement of the Honble Supreme Court and that of Honble Rajastan High Court in Aditya Cement Ltd.s case(supra), recently Commissioner of Central Excise, Ranchi dropped six periodical show cause cum demand notices involving total demand of Rs.8.51 crores(approx.) issued for the subsequent period i.e. from March, 2008 to October, 2014 to M/s.SAIL. Taking shelter of the said Order and the photographs depicting use of rails and railway track materials, it is his contention that the process of manufacture and the use of rails mentioned in the Jayaswal Neco Ltd.s case are thus undisputedly similar to the present cases, hence the said judgment is squarely applicable. He has further submitted that since the department has accepted and followed the principle laid down in above cases that CENVAT credit is admissible on rails and railway track materials under the new CENVAT Credit Rules, 2004, the department is precluded from challenging the applicability of the said judgment to the present case. In support, he has referred to the judgements of Honble Supreme Court in CCE, Navi Mumbai v. Amar Bitumen and Allied Products 2006(202)ELT 213(SC), Birla Corporation Ltd. v. CCE 2005 (186) ELT 266(SC), and Jayaswal Neco Ltd. v. CCE 2006 (199) ELT 145(SC).
5.8 To ascertain the present status of the said adjudication order, after conclusion of the hearing, the department has been directed to verify the same from the respective Commissionerate. It has been informed by the office of the Chief Commissioner of Central Excise & Service Tax, Ranchi Zone, Patna that the said adjudication order dated 07.08.2015 has been accepted by the Committee of Chief Commissioners.
5.9 Needless to emphasize, certainty is the hallmark of taxation, a principle laid down by Adam Smith, the famous economist way back in seventeenth century. The Honble Supreme Court in Amar Bitumen and Allied Products case referring to its earlier judgment in Birla Corporation case has observed as:
6.?This Court in a catena of cases has consistently taken the view that if an earlier order is not appealed against by the Revenue and the same has attained finality, then it is not open to the Revenue to accept judgment/order on the same question in the case of one assessee and question its correctness in the case of some other assessees. The Revenue cannot pick and choose. [See : Union of India & Others v. Kaumudini Narayan Dalal & Another [2001 (10) SCC 231]; Collector of Central Excise, Pune v. Tata Engineering & Locomotives Co. Ltd. [2003 (158) E.L.T. 130 (S.C.)]; Birla Corporation Ltd. v. Commissioner of Central Excise [2005 (186) E.L.T. 266 (S.C.)]; Jayaswals Neco Ltd. v. Commissioner of Central Excise, Nagpur [2006 (195) E.L.T. 142 (S.C.)], etc.]
7.?It was held in Birla Corporation Ltd. (supra), as under :
In the instant case the same question arises for consideration and the facts are almost identical. We cannot permit the Revenue to take a different stand in this case. The earlier appeal involving identical issue was not pressed and was, therefore, dismissed. The respondent having taken a conscious decision to accept the principles laid down in Pepsico India Holdings Ltd. (2001 (130) E.L.T. 193) cannot be permitted to take the opposite stand in this case. If we were to permit them to do so, the law will be in a state of confusion and will place the authorities as well as the assessees in a quandary. 4.4 Since the department has accepted the admissibility of CENVAT Credit on rails and railway track materials involving the same assesse i.e. M/s SAIL, for subsequent period under the CCR,2004 and identical issue is also involved in M/s Tata Steels case, therefore, adopting the principle of certainty & consistency in tax matters, in our view, the Appellants are eligible to credit on rails and railway track materials. Consequently, the discussion on the applicability of the said judgment to the present CENVAT Credit Rules, 2004 and other contentions raised in these Appeals would become more of academic in nature rather than resolving the dispute, hence not resorted to.
In the result, the impugned Orders passed in respect of the Appeals filed by M/s Tata Steel Ltd. & M/s SAIL are set aside and the Appeals are allowed, with consequential relief, if any, as per law. The Revenues Appeals are rejected on the same reasoning.
(Pronounced in the open court on 05.01.2016.)
SD/ SD/
(H.K.THAKUR) (D.M.MISRA) MEMBER(TECHNICAL) MEMBER(JUDICIAL)
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Appeal No. EA-102, 394, 520/06, 233/10 & 199/11, 135, 136/10