Custom, Excise & Service Tax Tribunal
M/S.G.R.Sponge & Power Ltd vs Cce, Raipur on 1 November, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-SM
COURT III
Excise/Cross/173/2011 in
Excise Appeal No.E/1162/2011-EX [SM]
[Arising out of Order-in-Appeal No.19/RPR-I/2011 date 25.01.2011 passed by the Commissioner (Appeals), Customs & Central Excise, Raipur]
For approval and signature:
HONBLE MR. S.K. MOHANTY, 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 Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s.G.R.Sponge & Power Ltd. Appellant
Vs.
CCE, Raipur Respondent
Present for the Appellant : Shri.Krishna K. Menon, Advocate Present for the Respondent: Shri.M.R.Sharma, A.R. Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) Date of Hearing/Decision: 01/11/2016 FINAL ORDER NO. __55714/2016____ PER: S.K. MOHANTY
This appeal is directed against the impugned order dated 25.11.2011 passed by the Commissioner (Appeals), Central Excise and Customs, Raipur. The brief facts of the case are that the appellant is engaged in the manufacture of sponge iron, falling under Chapter 72 of the Central Excise Tariff Act, 1985. During the disputed period, the appellant had availed cenvat credit on various items, namely, HSS plate, channels, joist, beams, chequered coil/ plates etc. used in the electro static pacificator, conveyor, Banker chimney and Ash Sylo etc. The appellant also availed cenvat credit of Central Excise duty paid on oxygen gas used for repair and maintenance of the machinery installed in the factory. Cenvat credit availed on the disputed goods were denied by the Department on the ground that the same cannot be considered as either input or capital goods for the appellant and taking of cenvat credit is not in conformity with the cenvat statute.
2. Shri Menon, the ld. Advocate appearing for the appellant submits that the issue is no more res integra in view of the decision of this Tribunal in the case of CCE, Raipur vs. N.R. Sponge Pvt. Ltd., Final Order No. A/53870-53871/2016 Ex. (Br.) dated 22.09.2016, wherein upon consideration of various judgments of Honble Supreme Court and the Honble High Court, this Tribunal has held that cenvat credit is admissible on the disputed goods. With regard to the oxygen gas, the ld. Advocate has relied on the decision of this Tribunal in the case of CCE, Raipur vs. Topworth Steel and Power Pvt. Ltd. reported in 2016- TIOL 1761 - CESTAT-Del.
3. On the other hand, Shri M.R. Sharma, the ld. AR appearing for the Revenue reiterates the findings recorded in the impugned order.
4. I have heard the ld. Counsel for both sides and perused the records.
5. I find that this Tribunal in the case of N.R. Sponge Pvt. Ltd. (supra) has allowed the cenvat benefit on the goods, namely, plates, angles, channels etc. holding the same as inputs/capital goods for availment of cenvat credit. The relevant paragraph in the said judgment is extracted below:-
5. We find that the Honble Madras High Court in Indian Cements Ltd. 2012 (285) ELT 341 (Madras), 2014 (305) ELT 558 (Madras) and 2014 (310) ELT 636 (Madras) examined the same issue and held that the credit is available for these steel items when they are used in fabrication of structurals to support the various machineries within the factory. We note that the Tribunal has been consistently following the above ratio with reference to the eligibility of credit on these steel items. Reference can be made to the recent decision of the Tribunal in Singhal Enterprises Pvt. Ltd. - 2016-TIOL-2451-CESTAT-Del. The Tribunal observed as under:-
13. Now we turn to the question, whether credit is admissible on various structural steel items, such as, M.S.Angles, Sections, Channels, TMT Bar etc., which have been used by the appellants in the fabrication of support structures on which various capital goods are placed? The same stands denied by the lower authority. The learned DR has sought disallowance of the same by citing the decision of the Larger Bench in the case of Vandana Global Ltd. (supra) and other judgements. Further, he has brought to our notice and emphasized the amendment carried out in Explanation-II to Rule 2(a) which defines the term Input w.e.f. 07.07.2009. It has further been pleaded that the Cenvat Credit claimed for the period prior to this will be covered within the decision of the Larger Bench in the case of Vandana Global Ltd. (supra).
14. The Larger Bench decision in Vandana Global Ltd.s case (supra) laid down that even if the iron and articles were used as supporting structurals, they would not be eligible for the credit. Considering the amendment made w.e.f. 7.7.2009 as a clarification amendment and hence to be considered retrospectively. However, we find that the said decision of the Larger Bench was considered by the Honble Gujarat High Court in the case of Mundra Ports & Special Economic Zone Ltd. 2015 (04) LCX0197 - 2015-TIOL-1288-HC-AHM-ST, wherein it was observed that the amendment made on 07.07.2009 cannot be held to be clarificatory and as such would be applicable only prospectively.
15. We find that the controversy can be laid to rest by making a reference to the decision of the Apex Court in the case of CCE, Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd. 2010(255) ELT 481 (SC) - 2010-TIOL-51-SC-CX, wherein the Honble Supreme Court has considered an identical issue of steel plates and MS channels used in the fabrication of chimney for diesel generating set. The credit stands allowed in the light of Rule 57 Q of the erstwhile Central Excise Rules, 1944. In the said judgement, the Apex Court has referred to the user test evolved by the Apex Court in the case of CCE, Coimbatore Vs. Jawahar Mills Ltd.- 2001 (132) ELT 3 (SC) = 2002-TIOL-87-SC-CX, which is required to be satisfied to find out whether or not particular goods could be said to be capital goods. When we apply the user test to the case in hand, we find that the structural steel items have been used for the fabrication of support structures for capital goods. The appellants have argued that the various capital goods, such as, kiln, material handling conveyor system, furnace, etc. cannot be suspended in mid air. They will need to be suitably supported to facilitate smooth functioning of such machines. It is obvious that the structural items have been suitably worked upon for this purpose. Accordingly, the goods fabricated, using such structurals, will have to be considered as parts of the relevant machines. The definition of Capital Goods includes, components, spares and accessories of such capital goods. Accordingly, applying the User Test to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of Capital Goods as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit.
16. In line with the discussions, we set aside the impugned order and allow the appeal.
6. With regard to oxygen gas, I find that in terms of the broad definition of input contained in Rule 2(k) of the Cenvat Credit Rules, 2004, the said item should fall within its scope and ambit for the purpose of availment of cenvat benefit. Further, I find that this Tribunal in the case of Topworth Steel and Power Pvt. Ltd. (supra) has allowed the cenvat credit on the oxygen gas used within the factory in or in relation to manufacture of the final product. In the case of Ambuja Cements Eastern Ltd. (supra), the Honble Chattisgarh High Court have also allowed the cenvat benefit on welding electrodes used in the repair and maintenance of plant and machinery as input for availment of the cenvat benefit.
7. In view of the settled position of law, I am of the opinion that the appellant is eligible for the cenvat credit on the disputed goods. Therefore, the impugned order is set aside and the appeal is allowed in favour of the appellant.
[Dictated and pronounced in the Open Court] (S.K. MOHANTY) MEMBER (JUDICIAL) Anita 0 2