Custom, Excise & Service Tax Tribunal
M/S. Orissa Sponge Iron Ltd vs Cce, Bbsr-Ii on 24 July, 2012
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No. Ex.Ap.585/06
(Arising out of Order-in-Original No.CCE/BBSR-II/(DENOVO) 12-COMMISSIONER/2006 dated 19.07.2006 passed by the Commissioner of Central Excise, Customs & Service Tax, Bhubaneswar-II.)
FOR APPROVAL AND SIGNATURE
HONBLE SHRI S.K. GAULE, MEMBER(TECHNICAL)
HONBLE DR. D.M.MISRA, 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
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?
M/s. Orissa Sponge Iron Ltd.
Applicant (s)/Appellant (s)
Vs.
CCE, BBSR-II
Respondent (s)
Appearance:
Shri S.C.Mohanty, Advocate for the Appellant(s) Shri S.Misra, Addl.Commr.(A.R.) for the Revenue CORAM:
Honble Shri S.K. Gaule, Member(Technical) Honble Dr. D.M.Misra, Member(Judicial) Date of Hearing :- 24.07.2012 Date of Pronouncement :- 24.07.2012 ORDER NO.
Per Dr. D.M.Misra.
1. This is an appeal filed by the appellant against Order-in-Original No.CCE/BBSR-II/(DENOVO) 12-COMMISSIONER/2006 dated 19.07.2006.
2. Briefly stated the facts of the case are that the appellant is engaged in the manufacture of sponge iron falling under chapter 72 of C.E.T.A., 1985 in their factory at Palaspanga in Orissa. In the same factory premises, they also manufacture steel billets out of the sponge iron. The appellant had taken separate registration for these commodities, namely, sponge iron and steel billets though manufactured in the same factory premises but located at different parts in the said factory premises. A show cause notice dated 14.05.1998 was issued to them alleging under-valuation of sponge iron manufactured and used within the same factory in the manufacture of steel billets. The said demand was confirmed by the ld.Commissioner against which the appellant filed appeal before the Tribunal, at New Delhi. Before the Tribunal, the appellant had raised the plea of revenue neutrality with reference to their eligibility to the Notification No.67/95-CE dated 16.03.1995 on the ground that since the sponge iron manufactured and used captively within the same factory premises, in the manufacture of dutiable steel billets, the same are not liable to duty. The Tribunal vide its order No.294/05-NB(A) dated 24.02.2005 after setting aside the order of the Commissioner, remanded the matter to the adjudicating authority for deciding the issue afresh. Consequently, the adjudicating authority in the remand proceedings decided the issue against the appellant. Aggrieved by the said order dated 19.07.2006, the appellant filed the present appeal.
3. The ld.Advocate appearing for the appellants had submitted that the plant manufacturing sponge iron and the plant manufacturing billets out of sponge iron, are situated in the same factory premises of the appellant. It is his submission that even though both the units are registered separately with the central excise department, but being situated within the same factory, hence the benefit of Notification No.67/95-CE dated 16.03.1995 is applicable to the impugned goods, namely, sponge iron used in the manufacture of the finished goods, namely, billets. He has referred to the judgement of this Tribunal in the case of Dhampur Sugar Mills Ltd. vs. CCE, Meerut 2001 (129) ELT 73(Tri.-Del.) which was upheld by the Honble Supreme Court in the case of Commissioner of Dhampur Sugar Mills Ltd. 2007 (216) ELT 823 (SC), Mahabir Jute Mills Ltd. vs. CCE, Allahabad 2007 (220) ELT 121 (Tri.-Del.), Orissa Spnge Iron Ltd. vs. CCE, BBSR-II 2008 (228) ELT 601 (Tri.-Del.).
4. Per contra ld.A.R. reiterated the findings of the adjudicating authority.
5. Heard both sides and perused the record. The limited issue for determination is, whether the appellant is entitled to the benefit of Notification No.67/95-CE dated 16.03.1995 for captive consumption of sponge iron used in the manufacture of billets in the same factory premises. It is not in dispute that the plant manufacturing sponge iron and the plant manufacturing billets are situated in the same factory premises as is evident from the ground plan produced by the ld.Advocate during the course of hearing. Also, it is not in dispute that even though both these plants/units are situated in the same factory premises, possess separate Central Excise registration and comply with the provision of Central Excise Acts and rules made thereunder separately. The Notification No.67/95-CE reads as follows:-
Exemption to all capital goods and inputs if captively consumed within the factory of production. In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts -
(i) capital goods as defined in the CENVAT Credit Rules, 2002 manufactured in a factory and used within the factory of production;
(ii)
6. The question needs to be answered is, whether sponge iron manufactured in one unit and consumed in another unit and both these units are situated in the same premises, could be considered as consumption within the factory as laid down under Notification No.67/95-CE dated 16.03.1995. We find that this issue is no more res integra and considered by the Tribunal in the case of Dhampur Sugar Mills Ltd. (supra) wherein it is observed as follows:-
4. We have considered the submissions of both the sides. As per Section 2(e) of the Central Excise Act factory means any premises, including the precincts thereto, wherein or in any part of which excisable goods other than the salt are manufactured, or wherein or in part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on. It has not been disputed by the Revenue that all the three plants manufacturing different excisable goods are situated in the same premises. The Revenue is treating them as different factory only on account of appellants taking three registrations under Rule 174 of the Central Excise Rules. The number of registrations, in our view, will not decide the number of factories unless and until they are situated in different premises. It is very clear from the definition of the term factories that all the three units will be regarded as one factory as all the excisable goods are manufactured in the same premises. Similar views were expressed by the Appellate Tribunal in the case of J.K.Synthetics Ltd. (supra) wherein it was held that as two units fall within the same premises within one boundary wall encircling the entire area of the land allotted to the appellants in the industrial area the appellant is entitled to obtain one consolidated licence for the manufacture of its goods within its factory complex as the object behind the grant of consolidated licence is that any person manufacturing different excisable goods within one factory area is entitled to obtain one licence instead of different licences for different commodities. The decisions relied upon by the learned SDR are not applicable as the facts are different. In Devidayal Electronics case the Bombay High Court was interpreting the term Industrial Unit. In fact in the said case it was observed by the Bombay High Court that as the Notification uses the word factory and it uses the word industrial unit, it must, therefore, be assumed that the words were intended to bear different meaning. Put differently the words Industrial Unit must mean something other than factory. Similar was the situation in the case of Dhampur Sugar Mills, 1998 (26) RLT (669). Accordingly we hold that the benefit of Notification No.67/95 is available to the Appellants as the excisable goods have been used in the factory of manufacture only. Both the appeals are thus allowed.
7. The appeal against this judgement of the Tribunal was dismissed by the Honble Apex Court. We are in agreement with the aforesaid view of the Tribunal and of the opinion that even though both these units are having separate Central Excise registration, but being situated in the same factory premises, the benefit of exemption Notification No.67/95-CE cannot be denied to the sponge iron manufactured in one unit and consumed in the manufacture of billets in another unit. Consequently, the order of the ld.Commissioner is set aside and the appeal is allowed with consequential relief, if any, as permissible under law. Appeal allowed.
(Operative part of the order was pronounced in the open court.) Sd/ sd/ (S.K. GAULE) (D.M.MISRA) MEMBER(TECHNICAL) MEMBER(JUDICIAL) sm 6 Appeal No.Ex.Ap.585/06