Custom, Excise & Service Tax Tribunal
Sova Ispat Alloys Mega Projects Ltd vs Bolpur Commissionerate on 18 April, 2023
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
KOLKATA
REGIONAL BENCH - COURT NO.2
Excise Appeal No.78813 of 2018
(Arising out of Order-in-Appeal No.43/Bol-C.Ex/2018-19 dated 03.05.2018 passed by
Commissioner (Appeals) of CGST & Excise, Siliguri)
M/s Sova Ispat Alloys (Mega Projects) Ltd.
1,R.N.Mukherjee Road, Martin Burn House,5th Floor,Room No.59,Kolkata-700001
Appellant
VERSUS
Commissioner of CGST & Excise, Bolpur
Nanoor Chandidas Road,SIAN,Bolpur, Dist.-Birbhum, Pin-731204
Respondent
APPERANCE :
Shri N.K.Chowdhury, Advocate for the Appellant Shri A.Roy, Authorized Representative for the Respondent CORAM:
HON'BLE MR.RAJEEV TANDON, MEMBER (TECHNICAL) FINAL ORDER NO...75250/2023 DATE OF HEARING : 18 .04.2023 DATE OF DECISION : 18 .04.2023 Per Rajeev Tandon :
The appellant manufacture ferro alloys. They use amongst other items "Electrode Carbon Paste(ECS)" in the furnace to facilitate the manufacture of the finished goods. (ECS) is used inside the furnace and it is their contention that the same is in the nature of consumable and gets consumed during the course of the manufacturing process. They submit that ECS is also contained in the finished goods, i.e. ferro alloys and therefore, it is rightly considered to be an input in terms of Rule 2 (k) of the Cenvat Credit Rules, 2004. 2 Excise Appeal No.78813/18
2. On the other hand, it is the Revenue's contention that the subject goods are in the nature of capital goods in terms of Rule 2 (a) of the Cenvat Credit Rules, 2004 and accordingly, cenvat credit on them ought to have been availed by the appellants as prescribed for capital goods, that is limiting it two shots of 50% in each of the two financial years.
3. As the appellant had taken cenvat credit of the said goods in one go (not spread over different financial year blocks), they were issued two show-cause notice dated 19th July, 2011 (for the period December, 2006 to March, 2011) and dated 30th April, 2012 (for the period 2011-
12), alleging that the appellants had taken 100% cenvat credit on ECP, treating the said goods as input. The Adjudicating Authority decided the matter against the appellant holding improper availment of credit, partially disallowing the same (to the extent of 50%) and permitting the same in subsequent year, confirming interest amount on the alleged excess cenvat credit availed, besides imposition of penalty under Section 11AC of the Central Excise Act, 1944 read with Rule 15 (2) of Cenvat Credit Rules, 2004.
3. The Commissioner (Appeals) in appellate proceedings, upheld the lower authorities' order to the extent of confirming the demand of interest of Rs.1,52,819/-. He however set aside the said orders of the adjudicating authority to the extent of imposition of penalty.
4. Explaining the process, the ld.Advocate informed that ECP is required in the furnace for proper conduction of high electricity voltage to the electrode for the melting of the raw materials. ECP is required to be used as technical necessity and is itself consumed in the process of 3 Excise Appeal No.78813/18 melting of the raw materials for the manufacture of ferro silicon/other ferro alloys.
He, therefore submitted that the said material is nothing but input in their case.
5. Heard both sides.
6. I find that the issue is no more res integra and has been long settled by slew of decisions passed by various authorities. The fact of use of the said goods and its ultimate consumption in the manufacture of finished goods is not disputed. The electrode carbon paste (ECP) owing to its capability to conduct electricity is essential for the manufacture of the ferro alloys and in the process gets consumed, even being a part of the finished goods. Therefore, it is certainly in the nature of a consumable.
6.1 The Tribunal in the case of Commissioner of Central Excise, Bhavnagar Vs. Unifrax India Ltd. reported in 2009 (245) ELT 474 (Tri.- Ahmd.) taking noted of its earlier decision and thereby allowed CENVAT Credit on electrode assembly and needles. It held as:
"2......."In Monnet Ispat Ltd. v. C.C.E., Raipur reported in 2002 (148) E.L.T. 1202 (Tri.-Del) it was held that the consumable items used in the induction furnace for the manufacture of ingots are inputs. Similarly it was held in Punjab General Manufacturing Works v. C.C.E, Kanpur reported in 2002 (147) E.L.T. 331 (Tri.- Del) that crucibles used for molten metals at high temperatures are consumables and have to be treated as inputs. The items used by the appellants are also of the same category and 4 Excise Appeal No.78813/18 therefore I do not find any merit in the appeal filed by the Revenue and accordingly reject the same." (Emphasis Supplied)
7. The Hon'ble Calcutta High Court in the case of Singh Alloys and Steel Ltd. Vs. Asstt. Collector : 1993 (66) ELT 594 (Cal.) had held that the definition of input was not dependent upon what ought to be used but what is in fact used. Relying on this decision the Tribunal in the case of Industrial Chemicals & Monomers Ltd., Vs. CCE, Madurai had held that carbon paste used in the manufacture of calcium carbide either as a technical necessity or otherwise was entitled to benefit of notification 201/79-CE dated 4.6.79, thereby rejecting the plea of mere incidental consumption of carbon paste in the course of manufacture.
8. It is further observed that this very aspect is also covered by the decision of this Tribunal in the case of Commissioner of Central Excise & Service Tax, Bolpur Vs. Maithon Alloys Ltd. vide Final Order No.FO/A/76164/2016 dated 16.11.2016.
9. Applying the ratio of the aforesaid judicial pronouncement to the facts herein, there is no question of denying that electrode carbon paste is in the nature of a consumable as it gets consumed during the process of manufacture of ferro alloys. The electrode carbon paste, therefore, cannot be held to be capital goods in terms of Rule 2 (a) of the Cenvat Credit Rules, 2004.
10. The decision of the Tribunal in the case of Silical Metallurgic Limited Vs. Commissioner of Central Excise, Cochin reported in 2002 (149) ELT 711 (Tri.-Bang.), is on a totally different sphere of consideration and not applicable to the present case at hand. 5 Excise Appeal No.78813/18
11. I am of the opinion that electrode carbon paste used and consumed in the process of manufacture of ferro alloys is an input eligible for cenvat credit under Rule 2 (k) of the Cenvat Credit Rules, 2004. I, therefore, find no infirmity in the appellant having availed credit on the said product as input. Accordingly, the demand of interest cannot be sustained.
12. The impugned order of the ld. Commissioner (Appeals) is set aside and the appeal is allowed with consequential relief, if any.
(Operative part of the order was pronounced in the open court) Sd/-
(Rajeev Tandon) Member (Technical) T.K.