Custom, Excise & Service Tax Tribunal
M/S Bajaj Hindustan Limited vs Cce & St, Meerut I on 7 August, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING/DECISION : 07/08/2014. Excise Appeal No. 55682 of 2013 (SM) [Arising out of the Order-in-Appeal No. 291/CE/MRT-I/2012 dated 27/09/2012 passed by The Commissioner (Appeals), Central Excise, Meerut.] For Approval and signature : Honble Shri Rakesh Kumar, 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 would 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 : Department Authorities? M/s Bajaj Hindustan Limited Appellant Versus CCE & ST, Meerut I Respondent
Appearance Ms. Mehak Gupta, Advocate for the appellant.
Shri M.S. Negi, Authorized Representative (DR) for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) Final Order No. 53212/2014 Dated : 07/08/2014 Per. Rakesh Kumar :-
The appellant are a sugar mill engaged in manufacture of sugar and molasses chargeable to Central Excise duty. For manufacture of refined sugar they also import raw sugar which is transported from the port to the factory by filling the same in PP Bags. During the period from January 2010 to August 2010, they took Cenvat credit of Rs. 1,62,576/- in respect of PP Bags, Welding Electrodes and Steel items namely MS Angles, Channels, Plates etc. The Department was of the view that these items are not eligible for Cenvat credit. Accordingly the Jurisdictional Assistant Commissioner vide order-in-original dated 14/1/12 disallowed the Cenvat credit in respect of the above items and confirmed the Cenvat credit demand. On appeal being filed to Commissioner (Appeals) against this order, the Commissioner (Appeals) vide order-in-appeal dated 18/10/12 upheld the Cenvat credit demand except for setting aside of the penalty of Rs. 50,000/-. Against this order of the Commissioner (Appeals), this appeal has been filed.
2. Heard both the sides.
3. Ms. Mehak Gupta, Advocate, the learned Counsel for the appellant, pleaded that while PP bags have been used for storage of raw sugar during its transportation from port to the factory and during storage in the factory, the Welding Electrodes were used for repair and maintenance of the plant and machinery. As regards the steel items MS Angles, Channels, Plates etc., she pleaded that these items have been used for fabricating the components parts of the sugar mill machinery for replacing of the old and worn out parts and, as such, these items have to be treated as used in relation to manufacture of parts of sugar mill machinery. She pleaded that the Department has denied the Cenvat credit in respect of steel items on the ground that the same have been used in the foundation of the machinery or the supporting structure of the machinery, but there is no evidence in this regard. She cited the judgment of the Tribunal in the case of CCE, Panchkula vs. Shahbad Co-op. Sugar Mills Ltd. reported in 2013 (298) E.L.T. 421 (Tri. Del.), wherein it has been held that the steel plates used for repair and maintenance of the plant and machinery would be eligible for Cenvat credit. She also cited the judgment of the Tribunal in the case of M/s Manglam Cements Ltd. vs. CCE reported in 2014 (201) ECR 207 (Tri. Del.), wherein it was held the steel items used for repair and maintenance for plant and machinery would be eligible for Cenvat credit. She, therefore, pleaded that in view of the above submissions, the impugned order is not correct.
4. Shri M.S. Negi, the learned DR, pleaded that during the period of dispute, Rule 2 (k) of the Cenvat Credit Rules has been amended so as to exclude from the purview of the term input, the steel items used for laying foundation for the machinery or for fabrication of supporting structures for the machinery, that in this case though the appellant plead that they had used the steel items for repair and maintenance of plant and machinery or for fabrication of the components of the machinery for replacing, old and worn out parts since no evidence in support of this claim has been produced and it has to be presumed that the steel items have been used as supporting structures of the machinery or as foundation of the machinery and, hence, the same would not be eligible for Cenvat credit, that as regards PP bags, the same are not eligible for Cenvat credit in view of judgment of the Tribunal in the case of J.K. Sugar Ltd. vs. CCE, Meerut II reported in 2010 (255) E.L.T. 554 (Tri. Del.), wherein it was held that the PP woven bags used for packing the imported raw sugar during its transportation from the port to the factory would not be eligible for Cenvat credit, as the same cannot be considered as used in relation to manufacture of finished products. With regard to Welding Electrodes also, he stated that the same are not eligible for Cenvat credit. He, therefore, pleaded that there is no infirmity in the impugned order.
5. I have considered the submissions from both the sides and perused the records.
6. As regards PP bags, there is no dispute that the same have been used for transportation of the raw sugar imported in bulk from the port for the import to the appellants factory. Hence, in view of the Tribunals judgment in the case of J.K. Sugar Ltd. vs. CCE, Meerut II (supra), the same would not be eligible for Cenvat credit and, as such, the Cenvat credit demand on account of this item is upheld. As regards the Cenvat credit demand in respect of other items namely Welding Electrodes and MS Angles, Channels and Plates, the appellants plea is that these items have been used for repair and maintenance of the plant and machinery and for this purpose, the steel has been used for fabrication of the components of the machinery for replacing the worn out parts. However, the Departments contention is that the appellant have not produced any evidence in support of their contention regarding the use of these items and, therefore, it has to be presumed that these steel items has been used as supporting structures for machinery or for foundation of the machinery. Though the Department alleges that the use of the steel items was for this purpose only, that is, either for foundation of machinery or for supporting structures, there is no evidence in this regard and this is only a presumption, while the appellant in support of their contention regarding use of steel items have produced a chartered engineers certificate. In view of this, the conclusion that the steel items have not used for repair and maintenance of plant and machinery but have been used for supporting structures or foundation of the machinery, is not correct. Since, these items have been used for repair and maintenance, the same would be eligible for Cenvat credit, in view of judgment of Honble Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd. 2010 (256) E.L.T. 690 (Chhattisgarh) and judgment of Honble Rajasthan High Court in the case of Union of India vs. Hindustan Zinc Ltd. reported in 2007 (214) E.L.T. 510 (Raj.). As regards welding electrodes, there is no dispute that the same have been used for repair and maintenance of plant and machinery. Therefore, the Cenvat credit demand on the basis of denial of Cenvat credit in respect of Welding Electrodes and steel items is not sustainable.
7. In view of above discussion, while the Cenvat credit demand in respect of steel items and welding electrodes and penalty on this account is set aside, the Cenvat credit demand in respect of PP bags and penalty of equal amount is upheld. The appeal is thus partly allowed.
(Dictated and pronounced in open court) (Rakesh Kumar) Member (Technical) PK ??
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