Custom, Excise & Service Tax Tribunal
Rayen Steels (P) Ltd vs Cce(Appeals), Mysore on 30 October, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/21097/2017-SM [Arising out of Order-in-Appeal No. BEL-EXCUS-000-APP-SP-103-16-17 dt. 14/03/2017 passed by Commissioner of Central Excise(Appeals), Mysore] Rayen Steels (P) Ltd. Appellant(s) Versus CCE(Appeals), Mysore Respondent(s)
Appearance:
Shri Raghavendra B., Advocate For the Appellant Shri N. Jagadish, Superintendent(AR) For the Respondent Date of Hearing: 24/10/2017 Date of Decision: ...................
CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. / 2017 Per : S.S. GARG The present appeal is directed against the impugned order dt. 14/03/2017 passed by the Commissioner(Appeals) whereby the Commissioner(Appeals) has rejected the appeal of the appellant and upheld the Order-in-Original.
2. Briefly the facts of the present case are that the appellants are engaged in the manufacture of sponge iron falling under Chapter 72 of CETA, 1985. The appellants are availing the benefit of CENVAT credit of duty paid on input / input services and capital goods. It was noticed during the coruse of audit that the appellants have availed CENVAT credit on MS angles, plates, channels, joists etc. during the period from 02/2007 to 04/2009 and these items were used for fabrication and erection of structures, fabrication of bunkers, fabrication of columns to support two or more MS beams etc. It appeared that the credit availed on the said items is irregular inasmuch as these items are neither inputs nor capital goods. Accordingly, the lower authority referring to the Honble Supreme Court decision in the case of Saraswathi Sugar Mills, has held that the credit availed on the said items is irregular and ordered for recovery of the same besides demanding interest and imposition of penalty on the appellant. Aggrieved by the Order-in-original, the appellant filed appeal before the Commissioner(Appeals) who rejected the appeal mainly on the ground that the appellant has failed to establish the usage of the impugned material for fabrication of various components. Further the Commissioner(Appeals) has also not relied upon the certificate issued by the Chartered Engineer regarding the usage of various items on the ground that the certificate is vague and unspecific. Hence the present appeal.
3. Heard both the parties and perused records.
4.1. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed contrary to the allegation in the show-cause notice. He further submitted that the impugned order is contrary to the binding judicial precedent on the same issue. He further submitted that the show-cause notice has proposed to deny the credit on the allegation that HR sheets, MS plates, channels, joists, beams etc. used in fabrication of support structure for bunkers, kiln and pollution control equipment which are embedded to earth so as to form immovable property and hence the same cannot be considered as capital goods as defined under Rule 2(a) of the CENVAT Credit Rules, 2004. He further submitted that the impugned order having accepted that the credit cannot be denied on the ground of immovability, has denied the credit on the ground of non-production of documents which was not the allegation raised in the show-cause notice. He further submitted that the impugned order as well as the Order-in-original has travelled beyond the allegations in the show-cause notice and the same cannot be sustained. In support of his submissions, he relied upon the following decisions:-
i. Metrochem Industries Ltd. Vs. CCE, Vadodara-I [2013(292) ELT 578 (Tri. Ahmd.)] ii. Global Energy Food Industries Vs. CCE, Ahmedabad [2014(300) ELT 298 (Tri. Ahmd.)] iii. Unioson Metal Ltd. Vs. CCE, Ahmedabad [2010(253) ELT 618 (Tri. Ahmd.)] iv. HPCL Vs. CCE, Mumbai [2011(269) ELT 422 (Tri. Mumbai)] v. India Cements Ltd. Vs. CCE, Trichy [2013(296) ELT 513 (Tri. Chennai)] 4.2. He also submitted that capital goods becoming immovable property is irrelevant as the eligibility of credit has to be decided at the stage before becoming part of immovable goods. For this submission, he relied upon the following decisions:-
i. CCE Vs. ICL Sugar Ltd. [2011(271) ELT 360 (Kar.)] ii. CCE, Bangalore-II Vs. SLR Steel Ltd. [2012(280) ELT 176 (Kar.)] iii. Mahindra & Mahindra Ltd. Vs. CCE [2005(190) ELT 301 (LB)] 4.3. Further, he submitted that the issue of availment of credit on various iron and steel items used as components for capital goods or structural for support of capital goods is settled in favour of the appellant in the following decisions:-
i. Suguna Metals Pvt. Ltd. Vs. CC,CE&ST, Hyderabad-I [2016(339) ELT 119 (Tri. Hyd.)] ii. Metrochem Industries Ltd. Vs. CCE, Vadodara-I [2013(292) ELT 578 (Tri. Ahmd.)] iii. Monnet Ispat & Energy Ltd. Vs. CCE, Jaipur [2015(330) ELT 711 (Tri. Del.)] iv. India Cements Ltd. Vs. CESTAT [2015(321) ELT 209 (Mad.)] v. Commissioner Vs. India Cements Ltd. [2014(305) ELT 558 (Mad.)] 4.4. He further submitted that the impugned order rejecting the CENVAT credit on the ground that the appellant has failed to establish the usage of these materials. He further submitted that in this case, the appellant has produced the certificate from Chartered Engineer who has certified the usage of the materials and this fact has been admitted by the Revenue in the show-cause notice itself wherein it has been mentioned that as per the certificate, it is seen that 1063.601 MT of structural items have been used in the manufacture / fabrication of kilns, conveyors and pollution control equipments, which are rightly eligible for Cenvat credit. Further the CENVAT credit attributable to 81.321 MT of structural items used in the fabrication of Bunker has been denied.
5. On the other hand, the learned AR defended the impugned order and submitted that the appellant has failed to satisfy both the lower authorities regarding the actual usage of materials and moreover the certificate issued by the Chartered Engineer was also found to be vague and unspecific. In support of his submission he relied upon the decision of Honble Supreme Court in the case of Saraswati Sugar Mills Vs. CCE, Delhi-III [2011(270) ELT 465 (SC)].
6. After considering the submissions of both the parties and perusal of material on record, I find that in the impugned order, the Commissioner(Appeals) has mainly rejected the CENVAT credit on the ground that the appellant has failed to prove the actual usage of the material for fabrication of various components. Further I also find that the Commissioner(Appeals) has disbelieved the certificate issued by the Chartered Engineer on the ground that the same is vague and unspecific. Further I also find that on the basis of the certificate issued by the Chartered Engineer, substantial CENVAT credit has been permitted by the Revenue which is reflected in the show-cause notice itself. Further I find that in the case of Suguna Metals Pvt. Ltd. (supra), the Tribunal in similar circumstances has allowed the CENVAT credit on the basis of various decisions of the Tribunal. Further I find that the Chartered Engineer certificate produced on record has not been properly considered by both the authorities because on the basis of the certificate, substantial benefit has already been given to the assessee and therefore I am of the view that the certificate issued by the Chartered Engineer certifying the usage of the impugned goods for fabrication of various components is established. Therefore applying the ratios of the various decisions relied upon by the appellant, I am of the view that the appellants are entitled for the CENVAT credit on the impugned goods and the impugned order denying the same is not sustainable in law. Therefore, I set aside the impugned order and allow the appeal of the appellant with consequential reliefs, if any.
(Order pronounced on .....................) S.S GARG JUDICIAL MEMBER Raja....
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