Custom, Excise & Service Tax Tribunal
M/S. Jai Balaji Industries Limited, ... vs Commissioner Of Central Excise & ... on 10 November, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
EAST ZONAL BENCH: KOLKATA
STAY PETITION NO.E/S/310/2010
AND
EXCISE APPEAL NO.E/A/259/2010
(ARISING OUT OF ORDER-IN-ORIGINAL NO.116/COMMR./BOL./09 DATED 31.12.2009 PASSED BY COMMISSIONER OF CENTRAL EXCISE, BOLPUR)
FOR APPROVAL AND SIGNATURES OF
DR. D.M.MISRA, HONBLE JUDICIAL MEMBER
DR. I.P.LAL, HONBLE TECHNICAL MEMBER
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. JAI BALAJI INDUSTRIES LIMITED, UNIT-III
APPLICANT(S)/APPELLANT (S)
VERSUS
COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, BOLPUR
...RESPONDENT (S)
APPEARANCE:
SHRI K.K.ANAND, ADVOCATE ASSISTED BY SHRI S.MAHAPATRA, GM FOR THE APPLICANT(S)/APPELLANT(S);
SHRI S.MISRA, A.R. (ADDL.COMMR.) FOR THE REVENUE. CORAM:
DR. D.M.MISRA, HONBLE JUDICIAL MEMBER DR. I.P.LAL, HONBLE TECHNICAL MEMBER Date of Hearing & Decision: 10.11.2014 ORDER NO.FO/A/75619/14 Per Dr. D.M.Misra This is an Application seeking waiver of pre-deposit of duty of Rs.12.00 crore and equal amount of penalty imposed under Rule 15(2) of CENVAT Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944.
2. At the outset, ld. Sr. Counsel for the Applicant submits that during the period, April, 2006 to July, 2008, they had availed CENVAT Credit on various items namely, MS Angles, Channels, Joists, Chassis, Plates, HR Steet, Round, Beams, TMT Bars etc. falling under Chapter No.72 of the CETA85. The ld. Advocate claimed that the said items were considered as inputs under Rule 2(k) of the CENVAT Credit Rules, 2004, being used in or in relation to the fabrication of capital goods inside the factory premises and accordingly CENVAT Credit was availed. He submits that during the relevant period, they had received around 42,300 MT of the aforesaid steel items out of which, they had used 37,970 MT in the fabrication of capital goods inside the factory. Further, he submits that against the use of 37,970 MT, they had availed Credit only on 33,497 MT and the balance quantity of 4473 MT since used in civil structures and shed work, no CENVAT Credit was availed by them. The ld. Advocate further submits that the show cause notice was issued to them invoking extended period of limitation, alleging that as the said items are classifiable under Chapter No.72 of CETA, 1985, hence, do not qualify to be called as capital goods, as defined under Rule 2(a) of the CENVAT Credit Rules, 2004; accordingly no CENVAT Credit would be admissible on such items. In response to the said show cause notice, they had filed a detailed reply, wherein they furnished detailed use of such Angles, Channels, Beams etc. in the manufacture/fabrication of plant and machinery/capital goods inside the factory. The ld. Commissioner, though recorded it at paras:3.7 & 3.8 of the impugned Order, however, without recording a specific finding on the use of such materials, erroneously observed that the fabricated items are nothing but structures, supports, members, chutes and reservoirs of various plants constructed by them and not capital goods. The ld. Advocate further submits that the detailed submission in relation to fabrication of the capital goods and its use in the factory, supports their claim that the Angles, Channels, Beams etc. in question were, in fact, used in the fabrication of the capital goods. But, the same were not considered by the Commissioner, while passing the impugned Order. He also submits that without proper verification of the use of these fabricated capital goods from the Angles, Channels, Beams etc., it would be incorrect on the part of the Commissioner, to jump to a conclusion that these items were not used in the fabrication of the plant and machinery inside the factory and hence, not eligible to avail the CENVAT Credit under Rule 2(k) of the CENVAT Credit Rules, 2004, as inputs.
3. Per contra, ld. AR for the Revenue submits that the ld. Commissioner on the basis of the reply furnished by the Applicant, has recorded the finding at para 3.8 of the impugned Order, observing that these items were not used in or in relation to the fabrication of the capital goods but in the fabrication of structures. He, however, fairly accepts that on the basis of the description of the capital goods mentioned in the list furnished by the Applicant, the ld. Commissioner has arrived at the said conclusion, without any further verification. He also accepts that in Applicants own cases relating to other units, verifications were carried out by the field formations and necessary findings had been recorded on the basis of verification report, while adjudicating the demand notice. He has no objection in remanding the case to the ld. Commissioner for verification of the facts as claimed by the Applicant that these items were used in the fabrication of capital goods and not structures .
4. In his rejoinder, ld. Advocate for the Applicant fairly submits that he has no objection for verification of their claim about use of such items in the fabrication of the capital goods in the factory. Further, he submits that even though they have not submitted a Chartered Engineers Certificate in support of their claim, the Applicant would furnish the same before the ld. Adjudicating Authority, along with other evidences, to establish their claim that these items were used in the fabrication of the capital goods, as defined under Section 2(a) of the CENVAT Credit Rules, 2004.
5. After hearing both sides for some time, we find that the Appeal itself could be disposed of, at this stage. Accordingly, after waiving the requirement of pre-deposit of the dues adjudged, we take up the Appeal for disposal with the consent of both sides.
6. We find that the issue involved in the present case, revolves in a very narrow compass. It is the claim of the Appellant that the Angles, Beams, Channels etc. which they had procured during the relevant period, and availed CENVAT credit on it, were used in or in relation to the fabrication of the capital goods, defined under Rule 2(a) of the CENVAT Credit Rules, 2004. Consequently, they are eligible to avail CENVAT Credit on the same as inputs as prescribed under Rule 2(k) of the CENVAT Credit Rules, 2004. In the show cause notice, it has been alleged that since these items are classified under Chapter No.72 of CETA, 1985, hence, they are not eligible to avail the CENVAT Credit on the same as these item do not fall under the scope of the definition of capital goods. However, taking into consideration the reply filed by the Applicant, in the impugned Order, the ld. Commissioner observed that these items were not used in or in relation to the fabrication of the capital goods, but used as structures. We find from the impugned Order that the ld. Commissioners finding is not supported by any verification on the claim of the Appellant advanced in their reply to the Notice regarding its use in the fabrication of capital goods. Both sides agree that in similar cases of other units of the Appellant, necessary verifications were carried out by the field formation, and consequently, on the basis of such verification, findings were recorded. However, we find that in the present case, the Department had not verified the claim of the Appellant. Therefore, it is a fit case for remitting the matter to the ld. Commissioner for deciding the issue afresh. Needless to mention, the Department is at liberty to carry out necessary verification of the facts vis-`-vis the claim of the Appellant relating to the use of the disputed items. A copy of the Verification Report be served on the Appellant also, before adjudication of the case. Further, an opportunity of hearing be granted to the Appellant. All issues are kept open. The Appeal is allowed by way of remand. Stay Petition disposed off.
(Dictated and pronounced in the open court.)
SD/-14.11.14 SD/-14.11.14
(I.P.LAL) (D.M.MISRA)
TECHNICAL MEMBER JUDICIAL MEMBER
DUTTA/
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E/A/259/2010
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