Custom, Excise & Service Tax Tribunal
M/S The Ganga Kishan Sahkari Chinni ... vs Commissioner Of Central Excise, Meerut ... on 26 October, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,
REGIONAL BENCH : ALLAHABAD
Ex. Appeal No.57553/13
Arising out of OIA No.08-CE/MRT-I/2013 dated 30.01.2013 passed by Commissioner of Central Excise (Appeals), Meerut I
For approval and signature:
HONBLE MR. ANIL CHOUDHARY, 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 His Lordship wishes to see the fair copy
of the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
M/s The Ganga Kishan Sahkari Chinni Mills Ltd.
APPELLANT(S)
VERSUS
Commissioner of Central Excise, Meerut I
RESPONDENT (S)
APPEARANCE Shri Rajesh Chibber, Adv. for the Appellant (s) Shri Vikram Kaushik, A.C. (A.R.) for the Department CORAM:
HONBLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) DATE OF HEARING & PRONOUNCEMENT : 26. 10. 2015 ORDER NO.__________________________ Per Mr. Anil Choudhary :
The Appellant, M/s The Ganga Kishan Sahkari Chinni Mills Ltd., is in Appeal against Order-in-Appeal No. 08-CE/MRT-I/2013 dated 30.01.2013 passed by Commissioner of Central Excise (Appeals), Meerut I.
2. Brief facts are that the The appellant is a manufacturer of sugar and molasses. The appellant is in appeal against denial of Cenvat credit on certain goods being welding electrodes, channels, hot strip mill plate, angles, MS plate, TMT bars, GCGSC sheet et cetera. A show cause notice dated 24/9/09 was issued as it appeared to revenue on scrutiny of records that the Cenvat credit taken on the aforementioned items for the period September 2008 to April 2009 is improper as the items do not fall in the definition of capital goods. Prior to issue of show-cause notice, the appellant on some of the items like girder, hot strip mill plate, TMT, GCGSC sheet, which were used in civil work, the credit was reversed amounting to Rs.1,53,358/-. Further it appeared that on the other items as listed therein the same were used for repairing purpose of old plant and machinery and not used as capital goods nor as inputs for manufacturing of capital goods in the factory and thus, it appeared they're not eligible for the Cenvat credit and accordingly it was proposed to disallow the Cenvat credit of Rs.2,84,337/- taken by the appellant including the amount of Rs.1,53,358/- already reversed be not appropriated and further penalty was proposed under rule 15 (2) with interest.
3. The appellant contested the show cause notice contending that so far utilisation in the civilwork is concerned, they have already reversed the credit. Further so far utilisation of the goods in question used in repair of machinery like Mill house, Mill coupling and pinion, juice, pipe & vapor pipe, pump, impeller, vacuum filter and condensor et cetera are eligible being utilised in the plant & machinery which are further required for manufacturing of the output or the end products, which are cleared on payment of duty. Further MS Channel, angle, plate were used in Boilerhouse, Cane carrier, Mill house, juice, waterpipe, tank, condenser, which are all capital goods. The SCN was adjudicated and the proposed demand for a disallowance of credit was confirmed along with appropriation as proposed. Further penalty of Rs.2,84,337/- was imposed under the provisions of rule 15 of CCR read with section 11 AC of the Act. Being aggrieved the appellant preferred appeal before the ld. Commissioner (Appeals). Vide the impugned order the ld. Commissioner (Appeals) was pleased to uphold the disallowance of Cenvat credit but at the same time was pleased to set aside the penalty imposed. The ld. Commissioner (Appeals) observed that the contention of the appellant that number of iron & steel items, welding electrodes have been used as inputs for the maintenance of capital goods within the factory, but the appellant have failed to substantiate that the goods in question have actually been used for the fabrication of some capital goods within the factory which in turn have been used for manufacture of the final products. Further use of goods in question for maintenance of the capital goods has been specifically admitted by the appellant.
4. Being aggrieved the appellant is before this Tribunal in appeal. The ld. Counsel for the appellant urges that they had filed a detail chart as to utilisation of the goods in question claim for repair of capital goods and also filed detained certificate prepared by the Chief engineer and the same was countersigned by the general manager. In that chart they had mentioned the specific items of capital goods on the maintenance of which the inputs were utilized. A copy of the chart is also placed in the appeal book. The ld. Counsel further contend that the issue of utilisation of inputs for repairs and maintenance of capital goods is no longer res Integra and the same have been decided in favour of the assessee by another bench of this Tribunal in Kisan Sahkari Chini Mills Ltd versus Commissioner of Central Excise, wherein following the ruling of the Honourable Chhattisgarh High Court, Karnataka High Court and this Tribunal held that the goods used for repair and maintenance of machinery are inputs eligible for Cenvat credit. The expression used in or in relation to in clause, the activity of repair and maintenance of plant and machinery without which manufacturing is not possible., Surely, manufacturing activity is not possible with malfunctioning machinery, leaking, pipes and tubes. Therefore the activity of repair and maintenance of plant and machinery have a direct nexus with the manufacture of finished products and as such the utilisation of goods in this activity would be eligible for Cenvat credit. For deciding eligibility of an input for Cenvat credit, what is relevant is whether the activity in which the input is used has nexus with the manufacture of final product and the nexus has to be determined on the criteria as to whether that activity, is essential for the manufacture of the final products. The ld. Counsel also placed reliance on the ruling of another Bench in the case of Hindustan Petroleum Corporation Ltd. Vs. CCE, C and ST, Visakhapatnam, where it was held that H.R.Sheets and Steel, plates, et cetera used for repair and maintenance of storage tank within the factory, would be eligible for credit. Further when inputs were used in the repair and maintenance of storage tank which is capital goods, under the definition of capital goods, hence inputs would be eligible for Cenvat credit. The ld. Counsel further urges that so far the factual part is concerned the utilisation have not been found to be wrong, as claimed by them. Accordingly prays for allowing the appeal.
5. The ld.D.R. for Revenue, supports the impugned order.
6. Having considered the rival contentions I find that, save and except the inputs which have been used in civil work and which was not disputed and reverse entry was passed during the course of investigation. The other goods have been utilised in the repair and maintenance of capital goods which are further used in the production of the excisable finished products. In view of the fact that no final product can be manufactured without the repair and maintenance and upkeep of the capital goods, the inputs required for the upkeep and maintenance are eligible inputs for Cenvat credit. In this view of the matter, the appeal is allowed and the impugned order is set aside. The appellant will be entitled to consequential relief in accordance with law.
(Dictated and pronounced in the open Court) Sd/ (ANIL CHOUDHARY) MEMBER (JUDICIAL) mm 5 Ex. Appeal No.57553/13