Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Nagpur vs M/S Ambuja Cement Ltd on 14 August, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. IV Appeal No. E/307, 568 & 569/09 (Arising out of Order-in-Appeal No. SN/170-171/NGP/2008 dated 23.12.2008 passed by the Commissioner of Customs & Central Excise (Appeals), Nagpur). For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No 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 : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== Commissioner of Central Excise, Nagpur Appellant Vs. M/s Ambuja Cement Ltd. Respondent Appearance: Shri Ashutosh Nath, Assistant Commissioner (AR) for Appellant Ms. Anjali Hirawat, Advocate for Respondent CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 14.08.2014 Date of Decision: 14.08.2014 ORDER NO. Per: Shri Anil Choudhary
These appeals are filed by the Revenue against a common order being Order-in-Appeal No. SN/170-171/NGP/2008 dated 23.12.2008 passed the Commissioner of Customs & Central Excise (Appeals), Nagpur.
2. The brief facts of the case are that the respondent assessee, M/s Ambuja cement Ltd. is a manufacturer of cement and uses fly ash as one of its important raw materials for manufacture of cement. In order to purchase fly ash, the respondent entered into an agreement with the Chandrapur Thermal Power Station (CTPS in short), which is located about 52 km. away from the cement factory. In this agreement, the appellant was allowed to construct a fly ash handling facility in the premises of CTPS. In this fly ash handling facility, the respondent received fly ash from the power plant and thereafter carried some activities like watering etc. and or packing for the purpose of transportation to its cement manufacturing plant i.e. there is no manufacturing activity at such facility of fly ash handling. The respondent availed CENVAT Credit of Service Tax paid on various services such as erection, commissioning of fly ash handling plant and other services like maintenance and repair required for the fly ash handling plant. Two show-cause notices were served on the assessee, which details are as under: -
Date of SCN Period Order-in-Original No. Duty confirmed (Rs.) Penalty imposed (Rs.) 26.2.2007 Feb, 2006 to Nov, 2006 01/AKR/JC/ST/2008 dated 23.1.2008 15,18,238/-
5,00,000/-
05.6.2007 Dec, 2006 to April, 2007 71/DEM/CND/07-08 dated 19.2.2008 1,87,030/-
50,000/-
The show-cause notice was issued, as it appeared to the Revenue that the civil structural work for ash handling system being situated outside its cement manufacturing plant, hence the CENVAT Credit availed by the assessee on account of services availed with respect to the ash handling system was not permissible and or admissible. Vide Order-in-Original the proposed demand was confirmed along with penalty under Rule 15 of Cenvat Credit Rules, 2004 read with Rule 25 of Central Excise Rules, 2002. Being aggrieved the respondent assessee moved in appeal before the Commissioner (Appeals), who vide the impugned order was pleased to allow the appeals and set aside the Order-in-Original.
3. Being aggrieved, the Revenue is in appeal on the ground that the fly ash handling facility is situated outside the cement plant and as per Rule 2(l) of Cenvat Credit Rules, 2004 from the plain reading of the inclusive portion of the definition, it is seen that the credit of services in relation to setting up, repair and maintenance services are restricted to services utilized in factory premises only. As the fly ash handling plant is not a part of premises of the manufacturer assessee herein, the CENVAT Credit is not available with respect to services availed. Further ground has been raised that the appellate authority has erred in relying on the ruling of Apex Court in the case of Vikram Cements Vs. Commissioner of Central Excise - 2006 (194) ELT 3 (SC), wherein the Hon'ble Supreme Court has allowed the credit in respect of input i.e. explosives used for blasting mines to produce limestone for use in the manufacture of cement in factory situated at some distance away from mines. Further, the Apex Court has held that as regards the CENVAT Credit in respect of capital goods used in the mines, which are captive mines so that they constitute one integrated unit together with the concerned cement factory, CENVAT Credit will be available.
3.1 Further ground raised is that as per the terms of agreement between the respondent assessee and CTPS from clause 10 of the said agreement, CTPS/Maharashtra State Power Generation Company (MSPGC), shall have the right to instruct assessee to supply Fly Ash free of cost to small users located within radius of 100 km. and hence it is contended that the fly ash plant is not a captive plant. Further, Revenue has placed reliance on ruling of the Tribunal in the case of Rajhans Metals (P) Ltd. Vs. Commissioner of Central Excise, Rajkot 2007-TIOL-1491-CESTAT-AHM, wherein the Tribunal has held that credit of services used at the site of wind mill not located within the factory premises cannot be treated as input service. Thus, it is prayed that the impugned order be set aside.
4. In reply, the learned Counsel for the respondent assessee states that the matter is no more res integra and it is covered by the order dated 07.7.2010 of this Tribunal in the case of Commissioner of Central Excise Vs. Ultratech Cement Ltd. 2012 (278) ELT 523 (Tri-Mum), where in similar facts and circumstances relying upon the ruling of the Apex Court in the case of Vikram Cement (supra), it was held that from the plain reading of Rule 2(l) of the Cenvat Credit Rules, 2004 it is evident that it is no where mentioned that the input service credit is not available for the services utilized outside the factory premises and thus, the denial of CENVAT Credit on the ground that the services were not received by the assessee in the factory premises is not sustainable. The respondent also relies on the ruling of this Tribunal in the case of Commissioner of Central Excise Vs. Ultratech Cement Ltd. 2011 (21) STR 297 (Tri-Mum), wherein the facts were that the cement manufacturer had set up a River Pump and had availed CENVAT Credit in respect of repair and maintenance of the said River Pump situated at bank of Wardha River to draw water which is used by the assessee in manufacture of cement in its cement plant. In such circumstances, this Tribunal had held that input services utilized even outside the factory premises, which are indirectly connected to the manufacture of finished goods, the credit of such service is available relying on the ruling of the Apex Court in the case of Vikram Cement (supra) and also on the ruling of the Hon'ble Bombay High Court in the case of Wartsila India Ltd. 2010 (254) ELT 406 (Bom). Accordingly, she prays for dismissing the appeal of the Revenue.
5. Having considered the rival contentions, I find that in the facts and circumstances of the case, the services of Fly Ash Handling Plant set up by the respondent assessee has been used by it in procuring its raw material being fly ash for the purpose of manufacture of its end product being cement. Thus, the expenses incurred at the Handling Plant are in the nature of expenditure for the purpose of manufacture of its end product and in such circumstances, the services availed by the respondent assessee at the fly ash handling plant are inputs services eligible within the meaning of Rule 2(l) of Cenvat Credit Rules, 2004 for the purpose of manufacture of its final product. Further, the issue is covered by the earlier two rulings of this Tribunal in the case of Ultratech Cement (supra). Accordingly, the appeals of the Revenue are dismissed.
6. Initially, the Revenue had filed an appeal No. E/307/09 against one common appellate order disposing of two appeals. On such defect being pointed out requiring Revenue to file two separate appeals, the Revenue had filed two separate appeals being appeal No. E/568 & 569/09. Thus, the earlier appeal being appeal No. E/307/09 is dismissed as infructuous.
(Dictated and pronounced in Court) (Anil Choudhary) Member (Judicial) Sinha 1