Custom, Excise & Service Tax Tribunal
Manikgarh Cement vs The Commissioner Of Central Excise on 22 July, 2010
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No.I APPEAL No.E/1271/07 (Arising out of Order-in-Appeal No.SVS/202/NGP-C/2007 dated 07/06/2007 passed by Commissioner of Central Excise & Customs (Appeals), Nagpur) For approval and signature: Honble Mr.S.K. Gaule, Member (Technical) ====================================================
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 : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
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Manikgarh Cement Appellants
Vs.
The Commissioner of Central Excise,
Nagpur Respondents
Appearance:
Shri.J.C.Patel, Advocate for the Appellants
Shri.S.S. Katiyar, SDR for the Respondents
CORAM:
Mr.S.K. Gaule, Member (Technical)
Date of hearing : 22/07/2010
Date of decision :
O R D E R No:..
Heard both sides.
2. The appellant filed this appeal against the order-in-appeal No.SVS/202/NGP-C/2007 dated 07/06/2007 whereby the Commissioner (Appeals) upheld the order-in-original disallowing the Cenvat Credit of Rs.5,66,945/-.
3. The brief facts of the case are that the appellants are engaged in the manufacture of Cement falling under Chapter Heading No.2502.29 and 2502.10 of CETA, 1985. They also availed Cenvat credit on welding electrodes, welding wire and sweat on paste etc., claiming the same as input under the provisions of Rule 3 of Cenvat Credit Rules, 2004. They were using this goods for cutting, welding, maintenance of structural items of iron and steel and repair and maintenance of plant and machinery which is not a process integrally connected with ultimate production of final product. The department initiated proceedings against the appellants since the Cenvat Credit as per the provisions of Rule 2 of Cenvat Credit Rules, 2004 was admissible only on inputs, which are used in or in relation to the manufacture of final products. The lower adjudicating authority disallowed the Cenvat Credit so availed. They filed an appeal against the Commissioner (Appeals) order who upheld the order-in-original of the lower adjudicating authority. Aggrieved by the same, the appellant filed the appeal.
4. The contention of the appellant has been that the Ld. Commissioner (Appeals) has not properly appreciated the definition of the inputs as defined under Rule 2 (k) of Cenvat Credit Rules 2004 and the use of the welding electrodes, welding wires and sweat on paste by the appellants. The Ld. Advocate contended that since the goods are classifiable under Chapter 84 and in terms of definition of capital goods means - (a) (iii) components, spares and accessories of the goods specified at (i) and (ii) of the definition of capital goods. These goods are capital goods and therefore, eligible for Cenvat Credit. In support of their contention, they stated the following case laws:-
a) Hindustan Zinc Ltd., (2008 (228) ELT 517 (Raj)
b) UOI Vs. Hindustan Zinc Ltd., (2007 (214) ELT 510 (Raj)
c) CCE Vs. India Cements Ltd., (2009 (238) ELT 411 (Mad)
d) CCE Vs. Ramgarh Chinni Mills (2010 (251) ELT 139
e) Vikram Cement Vs. CCE (2009 (242) ELT 545
f) Definition of input and capital goods 4.1 The Ld. Advocate submitted that in their own case, the Tribunal has decided the issue of welding electrodes in their favour and the department has filed appeal in High Court against the said order and in another one of their own case which was decided against them and they have filed appeal against them, they filed appeal in the High Court and there is no stay in both the cases.
5. The contention of the Revenue is that throughout the appellants have been claiming the welding electrodes, welding wires and sweat on paste as inputs and availed the benefit accordingly. This is supported by the fact that they have availed 100% credit which was not available to the capital goods since only 50% of the credit was available to the capital goods on first installment. The Ld. SDR also submitted that the plea of the appellant before the Commissioner (Appeals) has throughout been claiming the goods as inputs and the appellants have accordingly relied upon case laws. The Revenue also heavily relied upon the Larger Benchs decision in the case of Vikram Cement.
6. I have perused the records and considered the submissions made by both sides. Both sides agreed that there is no stay against the respective appeals filed by them in the High Court. Undisputedly, the appellants have used the welding electrodes, welding wires and sweat on paste in cutting/welding of their iron and steel structural, repairing and maintenance of their plants and machineries. I find that from beginning till the date of filing of appeal before this tribunal, the appellant have claimed welding electrodes, welding wire and sweat on paste etc., as inputs. Now the appellant had claimed their goods as capital goods, under (a) (iii) components, spares and accessories of the goods specified at (i) and (ii), of the definition of Capital Goods under Cenvat Credit Rules, 2004. The appellants have heavily relied upon by the Honble High Court of Rajasthans decision in the case of Hindustan Zinc Ltd., Vs. UOI (2008 (228) ELT 517 (Raj). Whether welding electrodes used for repairs and maintenance of plant and machinery are eligible for cenvat credit both as capital goods as well as inputs was the question before the Honble High Court. The Honble High Court decided the question in favour of the assessee.
6.1 The Larger Bench of this Tribunal, in the case of Vikram Cement (supra), after taking into consideration various case laws and distinguishing the decision in the case of Hindustan Zinc Ltd., (supra) held that:
27. If one reads the judgment of the Honble Rajasthan High Court, therefore, it would be clear that the High Court has held that the substantial question of law which was sought to be raised before the matter was already answered by the decision of the Apex Court in J.K. Cottons case and, therefore, the High Court was not inclined to accept the reason given in Jaypee Rewa Plant case. Obviously the decision in Jay Pee Rewas case was distinguished by the Rajasthan High Court on the ground that the Tribunal had negated the claim for want of evidence, after relying upon the decision of the Apex Court in J.K. Cottons case. Besides, it nowhere discloses that the decision of the Apex Court in Kunhayammed was brought to the notice of the Honble Rajasthan High Court nor the fact that the order in SAILs case was subjected to filing of SLP was disclosed. It is pertinent to note that in SAILs case the order was passed on 17th July 2007 and it was reported in 2008 (222) E.L.T. 233. In the facts and circumstances of the case, therefore, though it cannot be said that the decision of the Honble Rajasthan High Court has been overruled by the Apex Court while dismissing the SLP in SAILs case, fact remains that the Apex Court refused to interfere in the said decision for reason disclosed in the order dismissing the SLP, and hence bearing in mind the ruling of the Apex Court in Kunhayammed read with in Dhanwanti Devi case it would be binding upon the Tribunal. Having said so, we hasten to clarify that the decision of the Honble Rajasthan High Court undoubtedly would be binding on the parties to the said case. However, the said decision will have to be read alongwith the order of the Apex Court in the SLP in SAILs matter. Undoubtedly, in SAILs matter, the decision in Jaypee Rewa case has been followed. Being so, the ratio of the Jaypee Rewa will also be binding upon this Tribunal being the decision of the Larger Bench.
41. For the reasons stated above, therefore, we are of the considered opinion that the welding electrodes used for repair and maintenance of the machinery cannot form the inputs within the meaning of said expression under Cenvat Credit Rules, 2002 and 2004 for the purpose of claim of Cenvat Credit under the said rules as the said products arc not used or utilized in the process of manufacture of the final product or in relation to the manufacture of the final product. Hence, we do not find any reason for interference in finding arrived at by the authorities below denying the Cenvat credit to the appellant in relation to the duties paid on the welding electrodes stated to have been used for the repairs and maintenance of the machinery.
In view of the above, I do not find any infirmity with the Ld. Commissioner (Appeals) impugned order. Accordingly, the impugned order is upheld and the appeal is dismissed.
(Pronounced in Court on ..) (S.K. Gaule) Member (Technical) pj 5