Custom, Excise & Service Tax Tribunal
M/S Dsm Sugar vs Cce, Meerut-I on 28 March, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi. Court No. 1 Date of hearing/decision: 28.03.2013 Honble Sh. Rakesh Kumar, Member (Technical) 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 Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? Excise Appeal Nos. 3031 to 3038 of 2010-SM (Arising out of order in appeal No. 166 173/CE/MRT-II/2010 dated 17.05.2010 passed by the Commissioner (Appeals), Central Excise, Meerut-II) M/s DSM Sugar Appellants Vs. CCE, Meerut-I Respondent
Present Sh. Alok Arora, Advocate for the appellant.
Present Sh. S.C. Kamra, Advocate for the Revenue.
Coram: Honble Sh. Rakesh Kumar, Member (Technical) Final Order Nos. 55963 55970 / 2013 Per: Rakesh Kumar:
The facts giving rise to these appeals are, in brief, as under:
1.1 The appellant are manufacturers of sugar chargeable to central excise duty. They availed cenvat credit of central excise duty paid on inputs and capital goods. The point of dispute in this case is from March 2008 to October, 2008. During this period, the appellant took different amounts of cenvat credit in respect of H.R. Coils, M.S. Girder, M.S. Bars, Coils & Wire Rod, M.S. Plates and shapes & Sections, G.C. Sheet, C.R. Coil etc., also welding electrodes and paints and thinners. The department being of the view that these items are not eligible for cenvat credit issued eight separate show cause notices for denial of cenvat credit amounting to Rs. 3,29,322/-, Rs. 75210/-, Rs. 4,10,370/-, Rs. 2,31,682/-, Rs.4,03,101/-, Rs. 4,50,857/-, Rs.4,80,857/- and Rs.4,72,757/- alongwith interest and also for imposition of penalty. These show cause notices were adjudicated by the Assistant Commissioner eight separate orders by which the cenvat credit demands mentioned above were confirmed alongwith interest and penalty of Rs. 10,000/- was also imposed on the appellant in each case. Against these orders passed by the Assistant Commissioner, appeals were filed before the Commissioner (Appeals), the details of which are given below:-
Sl. No. Appeal No. & date O-I-O No. & date Amount of cenvat credit disallowed (Rs.) Goods on which credit has been disallowed Period 1 84/10 dt. 29.03.10 327/AC/MBD/2009 dt. 28.01.10 3,29,322/-
H.R. Coil, M.S. Girder, M.S. Bar, Coils/ Wire Rod M.S. Plate and shape & section August 08 2 85/10 dt. 29.03.10 328/AC/MBD/2009 dt. 28.01.10 75,210/-
Welding Electrodes, Paint, Thinner, H.R. Coil and Shape & Section Sept. 08 & October 08 3 86/10 dt. 29.03.10 329/AC/MBD/2009 dt. 28.01.10 4,10,370/-
Welding Electrodes, H.R. Coil, M.S. Girder, M.S. Bar, G.P. Sheets, C.R. Coils M.S. Plate/Section and Shape & Section August 08 4 87/10 dt. 29.03.10 330/AC/MBD/2009 dt. 28.01.10 2,31,682/-
Welding Electrodes, M.S. Bar (Flat), M.S. Plate and Shape & Section June 08 & July 08 5 88/10 dt. 29.03.10 331/AC/MBD/2009 dt. 28.01.10 4,03,101/-
H.R. Coil/ Plate, G.P. Sheets, G.C. Sheets & C.R. Coils/ Sheets March 08 6 89/10 dt. 29.03.10 332/AC/MBD/2009 dt. 28.01.10 4,50,562/-
H.D. Coil, M.S. Angle/ Joint/ Beam/ Channel/ Sheets, Skelp, C.R. Sheets, M.S. Flat/ Steel Bar, Shape & Section March 08 7 90/10 dt. 29.03.10 333/AC/MBD/2009 dt. 28.01.10 4,80,857/-
H.R. Coil, G.C. Sheets, G.P. Coils/ Sheets, Skelp & C.R. Coils/ Sheets March 08 8 91/10 dt. 29.03.10 334/AC/MBD/2009 dt. 28.01.10 4,72,757/-
H.R. Coil, G.P. Coils, C.R. Coils/ Sheets and Shape & Section March 08 1.2. The above appeals were disposed of by Commissioner (Appeals) by a common order No. 166-173/CE/MRT-II/2010 dated 17.05.2010 by which the Commissioner (Appeals) upheld the Assistant Commissioners orders with regard to denial of the cenvat credit and confirmation of cenvat credit demands alongwith interest. However, he set aside the penalty imposed on the appellant. Against this order of the Commissioner (Appeals) these eight appeals have been filed.
2. Heard both the sides.
3. Shri Alok Arora, Advocate, the ld. Counsel for the appellant, pleaded that so far as the welding electrodes and paint and thinner are concerned, the use of these items for repair and maintenance of capital goods is not disputed; that paints and thinners are specifically covered by the definition of input and since the same are used to protect the capital goods from rust, the denial of cenvat credit in respect of the same is incorrect; that welding electrodes used for repair and maintenance of the plant and machinery are eligible for cenvat credit in view of judgment of Honble Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd. vs. CCE, Raipur reported in 2010 (266) ELT 690 (Chhattisgarh), and judgment of Rajasthan High Court in the case of Union of India vs. Hindustan Zinc Ltd. reported in 2008 (220) ELT 517; that the Commissioner (Appeals)s observation that the appellant have not produced any evidence regarding the use of welding electrodes in fabrication or repair and maintenance of the capital goods and regarding use of paints/ thinners for applying on capital goods for protection from rust is incorrect and as this ground has not been taken even in the show cause notice inasmuch as the show cause notice has been issued on the basis that welding electrodes; welding electrodes and paints & thinners are not inputs, that as regards the H.R. coils, H.R. sheet, G.C. sheet, Angles, Channels shapes and sections etc. the same except for some quantity which has been used for making of supporting structures for machinery, have been used in fabrication of various machinery or parts thereof; that in this regard, the appellant had furnished the evidence regarding the use of these items in form of store register showing the receipt of these items, issue slips as well as certificate of G.M. (Technical) of the factory countersigned by a Chartered Engineer; that issue slips clearly show the quantity of the steel item, the description of the steel item and where the same was used; that neither in the order-in-original nor order-in-appeal the use of these items has been considered and at both the stages the cenvat credit has been denied; on the general ground that these items are normally used for supporting structure; that the ground on which the cenvat credit has been denied in respect of steel items used in fabrication of machinery or parts thereof is totally incorrect, that when the steel items are used for fabrication of capital goods or parts thereof, the same would be eligible for cenvat credit as input as definition of input, as given in Rule 2(k) of the Cenvat Credit Rules, 2004 also covers the items used for fabrication of capital goods for use in the factory except for the inputs used in fabrication of supporting structures, foundation etc; that the evidence regarding use of steel items in fabrication of sugar mill machinery and parts thereof has been produced by the appellant but the same has not been considered and that in view of this, impugned order denying the cenvat credit in respect of steel items is not correct.
4. Sh. R. K. Mathur, ld. DR, supported the impugned order by reiterating the finding of the Commissioner (Appeals) and pleaded that the item are not covered by the definition of input.
5. I have considered the submissions from both the sides and perused the record.
6. So far as paints and thinners are concerned, the same, undisputedly have been used for applying on the various machinery. The paint is specifically covered by the definition of input as given in Rule 2(k) of the Cenvat Credit Rules, 2004 and, therefore, the impugned order denying cenvat credit in respect of item is not sustainable. As regards the ground that evidence regarding this use has not been produced, since this ground has not been taken in the show cause notice, the same cannot be raised at the appellate stage.
7. As regards welding electrodes, the reason given by the Commissioner (Appeals) are two folds. Firstly, welding electrodes used for repair and maintenance are not eligible for cenvat credit. Secondly, the appellant have not produced any evidence with regard to their use. But the ground regarding evidence of use of welding electrodes has not been taken in the show cause notice, as the show cause notice has been issued for denying the cenvat credit on welding electrodes only on the basis that the same are not input. In any case, the welding electrodes can be used either for fabrication of new machinery or its part or for repair and maintenance. While in the first case, the same would be eligible for cenvat credit as input, in the second case the same would be eligible for cenvat credit in view of judgement of Honble Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd., (supra) and judgment of Honble Rajasthan High Court in the case of Hindustan Zinc Ltd. (supra). Though the Commissioner (Appeals) has relied upon the judgment of Tribunal in the case of SAIL vs. Commissioner, Central Excise, Ranchi reported in 2008 (222) ELT 233, the SLP against which has been dismissed by the Apex Court, I find that this judgment has been discussed by Honble Chhattisgarh High Court in the case of Ambuja Cements Eastern (supra) and High Court has held that the judgement of Tribunal is not correct and that the dismissal of SLP by the Apex Court without giving any reason does not lay down any law. In view of this I hold that the impugned order denying the cenvat credit in respect of welding electrodes is not sustainable and is liable to be set aside.
8. As regards the H.R. Coil, M.S. Girder, G.C. Sheets, M.S. Channels, shape and section etc. the appellant themselve admit that while a part of these have been used for making supporting structures, for machinery the remaining quantity has been used for fabrication of various items if machinery and machinery parts and in support of this contention they have products the evidence in form of store register showing the receipt of these items in the factory, issue slips showing issue of these items for specific use and also certificate issued by General Manager countersigned by Chartered Engineer. On going through the impugned order in appeal, I find that the appellants plea with regard to evidence given in respect of use of these items has not been considered at all and simply a finding has been that these items are generally used for making of supporting structures for machinery and therefore would not be eligible for cenvat credit in view of the judgment of the Larger Bench of the Tribunal in the case of Vandana Global Ltd. vs. CCE, Raipur reported as 2010 (253) ELT 440 (Tri. LB). In cases, where the steel items, in question, have been used for fabrication of sugar mill machinery or its part, the same would be eligible for cenvat credit as input. The appellant in this regard has produced issue slip coupled with the certificate given by General Manager (Technical) countersigned by Chartered Engineer. In my view before rejecting the appellants claim in this regard this evidence must be carefully examined for which this matter would have to be remanded to the original adjudicating authority.
9. In view of the above discussion while the Commissioner (Appeals)s order denying the cenvat credit in respect of paints & thinners and welding electrodes is set aside, the order with regard to denial of cenvat credit in respect of H.R. coil, M.S. Bar, M.S. Plate, G.C. Sheets, M.S. Angles, Channels and steel items is also set aside, but the matter is remanded to the original adjudicating authority for denovo decision keeping in view the observations made above. To the extent these items have been used in fabrication of supporting structure, the cenvat credit would not be admissible and to the extent that these items have been used in fabrication of machinery or its parts the same would be eligible for cenvat credit and in this regard all the evidences produced by the appellant i.e. store registers, issue slips and certificate given by General Manager (Technical) / Chartered Engineer must be considered.
The appeals stand disposed of as above.
(Rakesh Kumar) Member (Technical) Pant 1