Custom, Excise & Service Tax Tribunal
M/S Panipat Co-Operative Sugar Mills ... vs Cce, Rohtak on 25 March, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi. Court No. 1 Date of hearing/decision: 25.03.2013 Honble Sh. 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 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? Excise Appeal No. 2330 of 2010-SM (Arising out of order in appeal No. 232/MA/RTK/2010 dated 20.05.2010 passed by the Commissioner (Appeals), Customs & Central Excise-III, Gurgaon) M/s Panipat Co-operative Sugar Mills Limited Appellants Vs. CCE, Rohtak Respondent
Present Ms. Rashi Sureka, Advocate for the appellant.
Present Ms. Shweta Bector, DR for the respondent.
Coram: Honble Sh. Rakesh Kumar, Member (Technical) Final Order No. 55895/2013 Per: Rakesh Kumar:
The appellant are manufacturer of sugar chargeable to central excise duty. The period of dispute in this appeal is from 2005-06 to 2007-08. During this period the appellant took cenvat credit of Rs. 4,25,989/- in respect of channels, Angles, Plates, H.R. Sheet etc. which according to them were used for fabrication of parts of machinery for replacing the old and worn out parts of various machinery i.e. for repair and maintenance of the plant and machinery and in this regard they have produced yearwise certificate of the Chartered Engineer. The department was of the view that these items are not eligible for cenvat credit. Accordingly the Jurisdictional Deputy Commissioner vide order-in-original dated 15.09.2009 confirmed the cenvat credit of Rs. 4,05,489/- alongwith interest and imposed penalty of equal amount on the appellant. On appeal being filed to Commissioner (Appeals), this order of the Deputy Commissioner was upheld vide order-in-appeal dated 10.05.2010 against which this appeal has been filed.
2. Head both sides.
3. Ms. Rashi Sureka, Advocate, ld. Counsel for the appellant pleaded that the items, in question, have been used for repair and maintenance of the plant and machinery of the plant and same are eligible for cenvat credit in view of the judgements of Honble Chhattisgarh High Court in case of Ambuja Cement Eastern Ltd. vs. CCE, Raipur reported in 2010 (256) ELT 690 (Chhatt.), and judgment of Honble Karnataka High Court in the case of Alfred Herbert (India) Ltd. reported in 2010 (257) ELT 29 (Kar.); and Honble Rajasthan High Court in case of Hindustan Zinc Ltd. vs. Union of India reported in 2008 (228) ELT 517 (Raj). She, therefore, pleaded that the impugned order upholding the cenvat credit demand in respect of the items used for repair & maintenance of plant and machinery is not sustainable.
4. Ms. Shweta Bector, ld. DR defended the impugned order reiterating the finding of the Commissioner (Appeals) and citing the judgment of Honble A.P. High Court in the case of Sree Rayalaseema Hi-Strength Hypo Ltd. vs. CC&CE, Tirupati reported in 2012 (278) ELT 167 (A.P.) pleaded that items, in question, are not eligible for cenvat credit and as such there is no infirmity in the impugned order.
5. I have considered the submissions from both the sides and perused the records. The appellant in course of proceedings before the Deputy Commissioner as well as Commissioner (Appeals) pleaded that during the operation of sugar mill certain parts and components of the machinery get worn out and to replace the same, the new components have to be fabricated by using the steel items. On going through the impugned order-in-appeal, I find that the Commissioner (Appeals) has not disputed the usage of the M.S. Angles, Channels, Plates, H.R. Sheet etc. The Commissioner (Appeals) has, however, simply relied upon the judgment of Larger Bench of the Tribunal in the case of Vandana Global Ltd. vs. CCE, Raipur reported in 2010 (253) ELT 440 (Tri. LB) and has upheld the Deputy Commissioners order. In my view when the fact that the items, in question, have been used for repair and maintenance of the plant and machinery, that is, for fabrication of the parts of machinery which had got worn out and have to be replaced, is not disputed, in view of the judgments of three High Courts Honble Chhattisgarh High Court, Honble Rajasthan High Court and Honble Karnataka High Court as mentioned above, the inputs used for repair and maintenance of machinery would be eligible for cenvat credit. Though in a recent judgment in case of Sree Rayalaseema Hi-Strength Hypo Ltd. vs. CC&CE, Tirupati (supra) Honble A.P. High Court has taken a different view holding that welding electrodes used for repair and maintenance are not eligible for cenvat credit as the activity of repair & maintenance is distinct from manufacture, in my view when three High Courts as mentioned above have held that the items used for repair and maintenance of plant and machinery are eligible for cenvat credit it is this view which has to be adopted. Moreover, for permitting cenvat credit what is relevant is as to whether the use of the item has nexus with manufacture and whether without that item manufacture is commercially possible. Since repair and maintenance is an activity which is essential for smooth manufacturing operations and without regular repair and maintenance, manufacturing activity is not commercially feasible, the inputs used for repair and maintenance of the plant would be eligible for cenvat credit. I, therefore, hold that the impugned order disallowing the cenvat credit is not sustainable. The same is set aside. The appeal is allowed.
(Rakesh Kumar) Member (Technical) Pant 1