Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise & ... vs M/S. Maithon Alloys Ltd on 27 October, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No.E/76125/2015
(Arising out of Order-in-Appeal No.14/BOL/2015 dated 28.10.2015 passed by the Commissioner of Central Excise (Appeals-II), Kolkata)
FOR APPROVAL AND SIGNATURE
Honble Shri P.K.Choudhary, Member (Judicial)
Commissioner of Central Excise & Service Tax, Bolpur
Applicant (s)/Appellant (s)
Vs.
M/s. Maithon Alloys Ltd.
Respondent (s)
Appearance:
Shri S.S.Chattopadhyay, Suptd.(AR) for the Appellant (s) Shri B.N.Chattopadhyay, Consultant for the Respondent (s) CORAM:
Honble Shri P.K.Choudhary, Member (Judicial) Date of Hearing:-27.10.2016 Date of Pronouncement: 16.11.2016 ORDER NO.FO/A/76164/16 Per Shri P.K.Choudhary
1. M/s. Maithan Alloys Limited, the respondent herein is manufacturer of Ferro Manganese and Silico Manganese and have availed cenvat credit on Electrode Carbon Paste (herein after referred to as ECP) as input for the following period.
Financial Year Figure Date of Show cause notice 1. 2010-2011 Rs.23,74,466/- 10.04.2012 2. 2011-2012 Rs.41,00,956/- 18.04.2012
2. The Adjudicating Authority observed that ECP which is used in furnace for manufacture of finished goods, appears to be capital goods and thereby only 50% of credit is available during a financial year. It is also alleged that the ECP cannot be treated as input under Rule 2(k) and instead it has characteristics of capital goods as defined under Rule 2(a) of Cenvat Credit Rules, 2004. According to the revenue the respondent should have taken only 50% of the available credit on ECP in a financial year under Rule 4(2)(a) of the Cenvat Credit Rules, 2004. Show cause notices were issued and after due process of law the Adjudicating Authority disallowed the cenvat credit of Rs.11,87,233/- for financial year 2010-2011 and Rs.20,50,478/- for the financial year 2011-2012 and allowed the same on the first day of April of subsequent financial year.
3. By the impugned order, the Commissioner (Appeal) allowed the appeal and passed an order. The revenue being aggrieved by this order of the Commissioner (Appeals) has preferred the present appeal.
4. Ld. AR for the appellant revenue reiterated discussions and findings of the adjudicating authority and grounds of appeal.
5. Ld. Counsel for the respondent assessee submits that the issue is no longer resintegra and the Ld. Commissioner (Appeals) has rightly allowed their appeal by passing a detailed and reasoned order. In support of his submissions he relied upon the following decisions:-
(i) Commissioner of C.Ex., Bhavnagar-vs.-Unifrax India Ltd. [2009(245) E.L.T. 474 (Tri.-Ahmd.)]
(ii) Punjab Gen. Mfg. Works vs.-Commissioner of C.Ex., Kanpur[2002(147)E.L.T.331(Tri.-Del.)]
(iii) Industrial Chemicals & Monomers Ltd.-vs.-Collr. Of C.Ex., Madurai [2003(162) E.L.T. 1016(Tri.-Del.)]
(iv) Monnet Ispat Ltd.-vs.-Commissioner of Central Excise, Raipur [2002(148) E.L.T. 1202(Tri.-Del.)].
6. After hearing both the sides and on perusal of the appeal records, I find from the impugned order that the Commissioner (Appeals) recorded use of the items, as under:-
From the facts of the case, it is seen that the said goods was used in the process of manufacture of ferro alloys. The said goods are actually used with the electrodes in M.S. casing inside the Arc furnace where high voltage of electricity is passed through for melting of the raw materials and in the process, the said goods get consumed and contain in the ferro alloys. Use of the said goods in the manufacture of ferro alloys is a technological compulsion.
7. In the grounds of appeal, it is contended by the revenue that the respondent did not produce any pro-rata consumption of ECP. From the nature of ECP, it establishes that essential property of ECP is its capability to conduct electricity, after being baked, and not reducing agent, or source of carbon. Therefore, ECP is component/accessory of the electrode.
There is no denial of the finding of the Commissioner (Appeals) that the goods get consumed and contained in the Ferro Alloys. The tribunal in the case of C.C.E. vs.- Unifrax India Ltd. (Supra) held as under.
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 Panjab 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 cosumables and have to be treated as inputs. The items used by the appellants are also of the same category and therefore I do not find any merits in the appeal filed by the Revenue and accordingly rejected the same.
8. The tribunal in the case of Industrial Chemicals & Monomers Ltd. vs.-Collr. Of C.Ex., Madurai (Supra), following the decision of Honble Calcutta High Court in the case of Singh Alloys and Steel Ltd. vs.- Asstt. Collector 1993 (66) E.L.T. 594 (Cal.), held that carbon paste used in manufacture of calcium carbide either as technical necessity or otherwise, and consumed therein. Thus, applying the ratios of the above judicial pronouncements in the facts of the case, I find that the said Electrode Carbon Paste is in the nature of consumable as it gets consumed in the manufacturing process and also contain in the ferro alloys. Therefore, it cannot be said such goods is capital goods in terms of rule 2(a) of the said Rules. Thus the ratio of the decision of Silcal Metallurgic (supra) relied on by the lower authority is not applicable here. I am of the opinion that Electrode Carbon Paste used in the process of manufacture of ferro alloys is actually an input eligible for credit under rule 2(k) of the said Rules.
In view of the above, I hold that the appellant have rightly availed input credit for the said goods and the question of payment of any interest does not arise. Accordingly, I do not find any merits in the appeal filed by the Revenue and reject the same.
(Order Pronounced in the Open Court on 16.11.2016)
S/d. (P.K.Choudhary)
MEMBER (JUDICIAL)
ss
1 Appeal No.E/76125/2015