Custom, Excise & Service Tax Tribunal
M/S Kvr Industries Ltd vs Cce, Visakhapatnam on 29 April, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench SMB Court I Appeal No. E/2613,2633,2634/2011-SM (Arising out of Order-in-Appeal No. 25/2011 (V-I) (CE) dt. 06.06.2011 passed by CCE, C&ST (Appeals), Visakhapatnam) For approval and signature: Honble Ms. Sulekha Beevi, C.S., Member(Judicial) 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 Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s KVR INDUSTRIES LTD., ..Appellant(s) Vs. CCE, VISAKHAPATNAM ..Respondent(s)
Appearance Ms. A.S.K. Swetha, Counsel for Appellant.
Shri J.M. Kishor, Assistant Commissioner (AR) for respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Date of Hearing: 29.04.2016 Date of decision: 29.04.2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The issue for consideration in above appeals being same, they were heard together and are disposed by this common order. The issue involved is the denial of CENVAT Credit of duty paid on MS Angles, Channels, MS Plates, MS Beams, Joists, Chequered plates etc., as capital goods.
2. The appellant is engaged in manufacture of writing and printing paper, newprint and krafts paper. The appellant availed credit on MS Angles, Channels, MS Plates etc., as capital goods. The period involved in Appeal No. 2613/11 is July, 2008 to September, 2008 and credit under challenge is Rs. 4,28,946/-. In Appeal No. 2634/2011, the period involved in October, 2008 to March, 2009 and disputed credit is Rs. 63,942/-. The appeals are filed against the order passed by Commissioner (Appeals) confirming the demand of above amounts of credit along with interest and imposing penalty.
3. The learned Counsel appearing for appellant Ms. A.S.K. Swetha explained that appellants utilized the subject items for erection of capital goods like Boiler (Chapter 84.28), Paper Machine (Chapter 84.39), Pulp Machinery (Chapter 84.41), Fuel Conveyor System (84.28). The allegation that appelalnt availed irregular credit as the MS items etc., are classifiable under chapter heading 72, 73, 74, 76 and that they do not come under the definition of capital goods is without basis. It is also alleged that subject items do not come under parts, components, accessories of capital goods. The appellants availed credit on subject items as capital goods and these items were used as spares, components, accessories of capital goods viz: Boiler, Paper pulp machine, Paper machine, Fuel conveyor system. The authorities below have wrongly denied credit relying upon the decision of larger bench in M/s Vandana Global Ltd., Vs CCE, Raipur [2010 (253) ECT 440 Tri-Del (LB)]. She pleaded that the appeals may be allowed.
4. Against this, the learned AR, Sri J.M. Kishore supported the findings in the impugned order. He submitted that amendment was introduced in Explanation to Rule 2(K) of the definition of inputs w.e.f. 07.07.2009, by which credit is not admissible on MS items and cement used for making structures for support of capital goods. The larger Bench of the Tribunal in the case of Vandana Global Ltd (Supra) held that this amendment is retrospective. That therefore authorities below have rightly denied the credit.
5. I have considered the submissions made before me. The appelants contention is that the subject items were used for erecting the capital goods like Boiler, Paper pulp machine, Paper machine, Fuel conveyor system. That when MS Plates, MS Channels, MS Beams etc., are used for erecting/fabricating such capital goods, these MS items become part/component/accessory of such capital goods. On examination of definition of capital goods it can be seen that the components, spares, accessories of such machineries also fall within the definition of capital goods. Without erecting the Boiler, Paper machine etc., these capital goods cannot be put into use in the manufacturing activity. For erection of machinery the subject items have to be used. After fabrication of MS items in the process of erection and supporting, they become essential part of the machines without which the machines cannot be put to use. Standing alone without being erectd and connected to other parts/machines, the Boiler, Paper pulp machine, Fuel conveyor system etc., would not be functional.
6. The decision laid in Vandana Global Ltd., case was referred and distinguished by the Honble High Court in the case of Mundra Posts & SEZ Ltd Vs CCE & Cus [2015 (5) TMI 663 (Guj H.C)]. The Honble Court held that the amendment made in the definition of inputs w.e.f 07.07.2009 is prospective only. The period involved is prior to 07.07.2009. The Honble Apex Court in the case of CCE, Jaipur Vs Rajasthan Spinning & Weaving Mills Ltd., [2010 (255), ECT 481 S.C.] applying the user test evolved in Jawahar Mills judgment (2001 (132) ECT 3 S.C.) held that credit on steel items used for fabrication of chimney as integral part of diesal generating set is admissible. The Tribunal in the case of CCE, Visakhapatnam Vs M/s APP Ltd., [2011-TIOL 1378 Cestat Bang] observed that the view of the Tribunal in the case of Vandana Global Ltd., case was rendered before the judgment of the Honble Apex Court in Rajasthan Spinning & Weaving Mills Ltd (Supra) and therefore is no longer good law. The Honble High Court in the case of CCE & Cus, Visakhapatnam Vs Rashtriya Ispat Nigam Ltd., [2011 (4) TMI 1098 (A.P-H.C)] upheld the order of Tribunal which allowed credit on MS items used for fabrication in repairs and maintenance of capital goods within the factory. Again the Honble High Court of Madras in the case of India Cements Vs Cestat, Chennai [2015 (321) ECT 209 (Mad)] has held that credit is admissible on MS items used for erection of capital goods. In view thereof, I hold that appellant is eligible for credit availed on subject items.
7. In the result, the impugned orders are set aside. The appeals are allowed with consequential reliefs, if any.
(Operative part of this order was pronounced in court on conclusion of the hearing) SULEKHA BEEVI C.S. MEMBER(JUDICIAL) Jaya.
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