Custom, Excise & Service Tax Tribunal
M/S. Orient Cements vs Cc,Ce&St, Hyderabad-I on 10 June, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench SMB Court I Appeal No.E/2324/2012 (Arising out of Order-in-Appeal No.72/2012(H-I)CE dt. 25/05/2012 passed by CC,CE&ST(Appeals-I&III), Hyderabad) 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? M/s. Orient Cements ..Appellant(s) Vs. CC,CE&ST, Hyderabad-I ..Respondent(s)
Appearance Shri B.V. Kumar, Advocate for the appellant.
Shri Vikram Kaushik, Assistant Commissioner(AR) for the respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Date of Hearing:10/06/2016 Date of decision:10/06/2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The appellants are engaged in manufacture of cement and clinker. They were availing the facility of CENVAT credit of duty paid on inputs and capital goods. During the period December 2009 to September 2010, they availed credit of duty amount to Rs.36,89,517/- paid on MS angles, MS plates, MS channels, MS beams, HR coils/sheets etc. A show-cause notice was issued alleging wrong availment of credit. After due process, the original authority confirmed the demand along with interest and imposed penalty of Rs.4,00,000/-. The appellants filed appeal and vide the order impugned herein, the Commissioner(Appeals) upheld the order passed by original authority. Hence this appeal.
2. The learned counsel Shri B.V. Kumar appearing for the appellant explained the purposes for which the MS items were used. He submitted that the subject items were used in the fabrication of parts, components, accessories of capital goods which are integrated into the cement plant and used in the manufacture of final products. The subject items were used for fabrication of conveyor belt system, pollution control equipment, chimney, ducts, chutes, electrostatic precipitator, structural support for conveyor belt, fan chutes conveyor etc. The components/parts/accessories such as chutes, ducts, conveyor belts are not readily available to be purchases in market. They have to be fabricated suiting to the requirement of the cement plant. The subject items were also used for repair and maintenance of capital goods. Without periodical repair of plant & machinery, the manufacturing activity would not be commercially feasible. He placed reliance on the following decisions:-
i. CCE, Tiruchirapalli Vs. India Cements Ltd.
[2012(285) ELT 341 (Mad.)] ii. Saraswathi Sugar Mills Vs. CCE, Delhi [2011(270) ELT 465 (SC)] iii. CCE, Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd. [2010(255) ELT 481 (SC)] iv. Ramala Sahakari Chini Mills Ltd. Vs. CCE, Meerut [2010(260) ELT 32 (SC)] v. CCE, Coimbatore Vs. Jawahar Mills Ltd.
[2001(132) ELT 3 (SC)] vi. CCE &C, Vishakapatnam Vs. Rashtriya Ispat Nigam Ltd. [2011(271) ELT 338 (AP)] vii. Ramala Sahakari Chini Mills Ltd. Vs. CCE [2010(26) ELT 321 (SC)]
3. Countering the above submissions, the learned AR appearing for the Revenue reiterated the findings in the impugned order. He submitted that the subject items were used for repair and maintenance of plant and machinery and not for manufacture of final product. Credit has been availed on MS items as inputs. As per the definition of inputs, the goods are to be used directly or indirectly in the manufacture of final products. In Sree Rayalseema Hi-Strength Hypo Ltd. [2012(278) ELT 167 (AP)], it was held, the credit is not admissible on welding electrodes for repair and maintenance is distinct from manufacture. Further appellants have not established by evidence that subject goods were used for fabrication of capital goods.
4. I have heard the rival submissions. As per the definition of inputs, the goods used in the manufacture of capital goods is eligible for credit. It is seen from the records that subject items were used for fabrication of belt conveyors, chutes, ducts, chimneys etc. Department does not have a case that the subject items were diverted from the factory in any manner. Appellants have furnished in their returns as well as statements regarding the credit availed. To avoid breakdown and interception in the manufacturing activity, timely repair and maintenance of machinery is necessary.
5. The Revenue has placed reliance on the judgment rendered in the case of Sree Rayalseema Hi-Strength Hypo Ltd. In the said case, the issue was whether credit on welding electrodes used for repair & maintenance is admissible as inputs. The jurisdictional High Court in the case of CCE&C, Visakhapatnam Vs. Rashtriya Ispat Nigam Ltd. [2011(271) ELT 338 (AP)] held that credit on steel sheets & coal used in repair & maintenance of capital goods is eligible for credit.
6. The Honble Apex Court in the case of Ramala Sahkari Chini Mills Ltd. case (supra) doubted the interpretation of input laid in the judgment of Maruthi Suzuki Ltd. case and referred the matter to Larger Bench. The Larger Bench of Apex Court in Ramala Sahkari Chini Mills Ltd. reported in 2016-TIOL-20-SC-CXLB answered the reference stating that the word includes used in the definition does not have a restrictive meaning. The judgments cited by the appellant in the case of India Cements and Rajasthan Spinning & Weaving Mills Ltd. also is applicable to the case on hand.
7. For the above reasons, I hold that the impugned order is not sustainable. The same is set aside and the appeal is allowed with consequential reliefs.
(Operative part of this order was pronounced in court on conclusion of the hearing) SULEKHA BEEVI C.S. MEMBER(JUDICIAL) Raja.
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