Custom, Excise & Service Tax Tribunal
Sarda Energy & Minerals Ltd vs C.C.E., & Customs, Raipur on 20 December, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R.K.Puram, New Delhi COURT-I Date of hearing/decision: 20.12.2016 Central Excise Appeal No.725 of 2011 Arising out of the order-in-original No.Commissioner/RPR/63/2010 dated 27.12.2010 passed by the Commissioner, Central Excise & Customs, Raipur. Sarda Energy & Minerals Ltd. .. Appellant Vs. C.C.E., & Customs, Raipur Respondent
Appearance:
Present Shri J.M. Sharma, Consultant for the appellant Present Shri Yogesh Agarwal, A.R. for the Respondent -Revenue Coram: Honble Mr. Justice (Dr.) Satish Chandra, President Honble Mr. V. Padmanabhan, Technical Member Final Order No.55977/2016 Per Justice (Dr.) Satish Chandra:
The present appeal is filed against the Order-in-Original No.63/2010 dated 27.12.2010 passed by the Commissioner, Central Excise & Customs, Raipur.
2. The brief facts of the case are that the appellant is engaged in the manufacture of ferro alloys. During the period under consideration, the appellant has availed cenvat credit on Angles, channels, beams, flat, joist and plates etc. but the same was denied.
3. After hearing Shri J.M. Sharma, ld. Consultant for the appellant and Shri Yogesh Agarwal, ld. A.R. for Revenue, it appears that the issue is squarely covered by the decision of the Tribunal in the case of Lafarge India Pvt. Limited vs. C.C.E., Raipur [Final Order No.53775/2016 dated 27.9.2016] wherein 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).
4. A reference can also be made to another decision of the Tribunal in Singhal Enterprises Pvt. Ltd. vs. CC&CE, Raipur vide final order No. 53013/2016 dated 12.08.2016 where it was observed that -
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.
5. In view of the settle legal proposition (supra), the impugned order is set aside and the appeal is allowed with consequential relief.
(V. Padmanabhan) (Justice Dr. Satish Chandra)
Technical Member President
scd/
Appeal No.E/725/2011
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