Custom, Excise & Service Tax Tribunal
M/S Dalmia Bharat Sugar & Industries ... vs Cce, New Delhi on 6 December, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi, Court No. 1 Date of hearing/hearing: 06.12.2016 Excise Appeal Nos. 2055 of 2011 (Arising out of order-in-original No. 50/Aayukt/2011 dated 31.03.2011 passed by the Commissioner, Central Excise & Customs, New Delhi). M/s Dalmia Bharat Sugar & Industries Limited Appellant Vs. CCE, New Delhi Respondent
Appearance:
Sh. P. K. Sahu & Sh. Prashant Shukla, Advocates for the appellant Sh. Amresh Jain, AR for the Revenue Coram:
Honble Mr. Justice (Dr.) Satish Chandra, President Honble Mr. V. Padmanabhan, Member (Technical) Final Order No. 55755 /2016 Per: Justice (Dr.) Satish Chandra:
Heard Shri P.K. Sahu, ld. Counsel for the appellant and Sh. Amresh Jain, ld. AR for the Revenue.
2. The present appeal has been filed against the order No. 50/Aayukt/2011 dated 31.03.2011 passed by the Commissioner, Central Excise & Customs, New Delhi.
3. The brief facts of the case are that the appellant are engaged in the manufacture of sugar & molasses chargeable to Central Excise duty. During the period under consideration, the appellant took cenvat credit on various items namely M.S. Bar, M.S. Plate, Shapes & Sections, H.R. Plates etc. and other items falling under chapter 38, 39 & 76 angles, beams and channel etc. by alleging that these items were used by the appellant for repair and maintenance of plant and machinery or for modification of the existing plant of the existing machinery. The department was of the view that these items neither covered by the definition of capital goods as given in Rule 2(a) of the Cenvat Credit Rules, 2004, nor are covered by the definition of input as given in Rule 2(k) of the Cenvat Credit Rule and hence not admissible to credit. So, the demand of duty was asked by the impugned order. Being aggrieved with the order, the appellant has filed the present appeal.
4. With this background of the case and material available on record, we find that identical issue came up before the Tribunal in the same set of facts in the case of Lafarge India Pvt. Ltd. vs. CCE, Raipur vide order dated 27.09.2016 where it was observed that:
6. We find that apart from the various other case laws relied upon by the appellant as above, the decisions of Honble Madras High Court in India Cements Limited 2012 (285) ELT 341 (Mad.), 2014 (310) ELT 636 (Mad.) and 2014 (305) ELT 558 (Mad.) all on the same set of facts, though with reference to erstwhile Rule 57Q are also relevant. The Honble Supreme Court in Jayaswal Neco Limited 2015 (319) ELT 247 (SC) allowed cenvat credit on railway track materials used for handling raw material processed goods. The Tribunal in Bellary Steel and Alloys Limited vs. CCE, Belgaum 2005 (180) ELT 92 (Tri. Bang.) held that cenvat credit is available on HR sheet, angles, channels etc. used in fabrication and erection of technological structure and blast furnace and material handling system. Such supporting structure are also capital goods and the fact that they are embedded to earth is no reason for denying credit/ credit on input used. The Honble Punjab & Haryana High Court in CCE, Jullandhar vs. Pioneer Agro Extracts Ltd. 2008 (230) ELT 597 (P&H) held that channels and angles, joint of iron steel used for installation of batch vessel or essential plant and machinery and are eligible for credit as capital goods. The Honble Madras High Court in Thiru Arooran Sugar - 2015-TIOL-1734-HC-Mad.CX held that credit on M.S. Plates, angles, channels utilised in construction / erection of plant were eligible for credit. The High Court observed that the principle laid-down by the Honble Supreme Court in Rajasthan Spinning and Weaving Mills Ltd. (supra) is applicable to such situation.
7. We note that the Tribunal has been consistently following the ratio that the steel items when they are used in fabrication of capital goods and their accessories inside the manufacturer premises are eligible for credit by applying user test as evolved by the Honble Supreme Court in Rajasthan Spinning and Weaving Mills Ltd. (supra). A reference can be made to latest decision of the Tribunal in Singhal Enterprises Pvt. Ltd. vs. CC&CE, Raipur vide final order No. 53013/2016 dated 12.08.2016. The findings of the Tribunal are as under:
13. Now we turn to the question, whether credit is admissible on various structural steel items, such as, MS 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 judgments. Further, he has brought to our notice and emphasised 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. 07.07.2009 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, 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), 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 57Q of the erstwhile Central Excise Rules, 1944. In the said judgment, 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), 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.
8. In view of the ratio laid down in various decisions of this Tribunal, Honble High Courts and the Honble Supreme Court we find no merit in the impugned order. Accordingly, same is set aside, the appeal is allowed.
5. By following our earlier order (supra), we find no merit in the impugned order. The same is hereby set-aside. In the result, the appeal is allowed with consequential relief.
(Pronounced and dictated in open Court).
(Justice (Dr.) Satish Chandra) President (V. Padmanabhan) Member (Technical) Pant