Karnataka High Court
M/S Bannari Amman Sugars Limited vs The Commissioner Of Central Excise on 19 November, 2009
Bench: K.L.Manjunath, Aravind Kumar
IN THE HIGH COURT OF KARNATAKA, BANGAfLeR1§,
DATED THIS THE 19% DAY OF N0VEM"£;3ER,:'e:2R(§b'9 "
PRESEN'I:H »
THE HONBLE MR. JUSTICE _
AND
THE HONBLE MR. JLISTICE-A_RAv£Npv--K£jMAR'*; V
CEA 2.005.
1VI/ S Bannari Amman Sugars .L}imited.,v " v
Post Box No.27;'A£agant:hiVi11age§=,_ "
Nar1jangud'5?'1'e3C3--1.
Kamataka._. f" ~. 3 ~
(Represerflted by , ;
Mr. P. ManickaV*:{g:aga;1_, V *
Genera}"1\kianRger}'fi ' "
._ . Appeilant.
(By Sri. Rav1'sh2in1s;a1';-. Advocate }
" .C3(E}".rLi"1:1:1"iS§10r1eref Central Excise,
' 'Si S.2;*\('}.naya Marga.
Sijddhartha
'Mysore--'5--:=?Q (>3 1.
: Respondent
AA(Si1'I1J£.zV£3t:?I1El Jadhav, Advocate.)
This appeal is filed under Section 35G of the
Excise Act, H944 praying to set aside the CEST1'{f'--fifna.1'o17;;1er
dated 29--10--2004 passed in final order No. 1680-168 1.;/?.0C'4 4_
in appeal No.E/754/03 and hold that the _' 'appellant 'iau "
entitled to the refund of Cenvat Credit and inte:iest'al_rea'd_y '
paid Rs.'7,7 L860 and Rs.82,473 along Wit.h«in'teres't.or_ inpfithe
alternative to hold that the quant1'fi'catl'on'iofflenvat Crer.:li*t~./in
the show cause notice is erroneous 'and._incorr.e:ct. and refunci'
the excess payment of Cenvat'--..credit'v.of Rs.5.1lG..}l«2Q/ 4 with.'
interest and proportionate interest. already _paid;.
This appeal cominglei"'orrl_:"fore-__hear1ng, this day,
ARAVIND KUMAR J. d_(§HV€IT_€d ;the" following :
The credit facility
by the ':Appellate Authority and as
confirlrnedv before this Court challenging
the ordeigof the formulating the questions of law
which the 'ti}:j_cV1e'l'of adrnission of appeal on 3--'7--2006 was
- reéfrarned follows:
under the facts and in the
civrcunjistances of the case, the Tribunal was right
ppinlgnorlng the definition of "capital goods" set out
_ in" rule 57AA{a) of the Central excise rules, 1944
and rule 2{b) of the Cenvat Credit rules, 2001,
p
wherein "storage tanks" are specifically stated to
be capital goods?
{ii} Whether under the facts and
circumstances of the case, the Tribunal_.?fyas" _
in ignoring the definition of "inputS"_ the
57AA[d} of the Central Exciseliules,'j..l9{£?lAfgai1«§:rule
2[f) of the Cenvat Credit Rules, ll-It
inputsinclude goodssused ma:._iufacture_:'§ofvC
capital goods, which arefiairther use.d'in-"V-thelvfactory
of the manufacturer?
(iii) Whether under Jntlie' andfeircumstances of
the' having held at para
that. are not immovable property,
correctiin"denyirig'CenVat Credit on the basis of
. self ii:ndings?."
fléipvpellant contends that Tribunal was in error
the order of the first Appellate Authority by
ideilyingflthe Modvat Credit facility of credit inputs used in
"'._the"manufacture of molasses storage tank in the sugar
E?"
factory of the assessee on the ground that erectionf"o_f"the
storage tank as per pollution laws was mandatorilgr
for the appellant to instal the saigbstoragcél
steel as input.
3. We have heard Si»'i_._F{a.Vishankar,_ lleariiedwcounseitl
appearing for the appellant as_s_es'se_e"'and Sn'1t;\{eeI:1a J adhav,
learned standing couns'elllforlth¢;{_p Government.
4. Sri§..vI~'<ax(isharl;l:{ar that the first
Appellate were in error in
not in its proper perspective and
word storage hpaspbeerilllinserted in the said rule by way
of an 'V a_n1en.dment'lbylissuing of notification No.6/2001 C.E
E'dated.«_.1-3--2ilt)llI. He would submit that on account of
of this vital aspect by the Appellate
Authority resulted in denial of Modvat Credit. He would
also stibmit that Appellate Authority well as the Tribunal
misconstrued the interpretation of the rule and the
%
denial of the Modvat credit to the assessee. Elaborating his
submission he would contend that in respect of the Very
same issue i.e., with regard to extending the Cenvat/Modvat
credit facility in respect of the storage tank in t_hev_fca;~:.e of
KCP LTD Vs. Commissioner of Central Excise,
on 13-10-2008. The Very same 'l'i'>ibuna1"i1as.::l'grarited
relief and hence the present order of :'-s__uffer*s
from infirmity and there is .1io._"_justification fi3rv'd'_gappellan:t""e.
being singled out. He woulfldaxpialsp that in the
explanation to Rule it is that the capital goods
do not includ'e."an_§'equip'r:1entfor appliance used in the office
and it to all other goods would fall within
thegcategorsz 'ef_capita}'. goods and particularly with reference
., tovdlthe tank.
_ '5,_&'lPe1"..g_contra Srnt.Veena Jadhav would contend that
Were justified in rejecting the l\/fodvat credit in
respectfiof the inputs used in the storage tanks since the
.
capital goods which are used in the factory in tank is embedded to the earth and the erection of the said tank haVing_.bee.n ./_e.af'th it cannot be held as "goods for levy bf Central Excise Act 194.4 the _slto'ra:g:,e""'tank in"? question is attached to earthil:it.__is..__to lbe'-treated as an "immovable property'; 'aiflid. duty and thus contends that both the justified in rejecting t1*41_;3l.: support of her submission thiellfollowing decision.
V H Steel Products Ltd., Vs. 1' . Unigy:5of~»{.1a98(9s) E.L.T.334 [kar}] (ii}., A' "'Collector of C.Ex.Chandigarh Vs. ..t_l3amodar"'Ropeways & Construction Co.[P)
-Lf'm,[2oo3{151) E.L.T.3(S.C}]. l Pragathi Paper Mills Ltd., Vs. "commissioner of C.Ex.Ghaz1'abad [2004 (176) E.L.T.464 [Tr1'--DeI]].
(iv) Commissioner of C. Ex.Mumbai Vs. Josts Engineering Co. Ltd.. {2002[1__46) E.L.T.29 (s.c)] ' (V) Mittal engineering Works (1é;~5.L't'd:;;V-' . Coiiector of c.Ex.Me¢nn__{'i.996(8s); V"
E.L.T.622[S.C.)} ' "
(vi) I Coliector of_4Centra_1"Exc1sg;-it-t.p;ine Nikhil Equipmeng».i9vt.Ltci.,,p' '={_2.(30éi1.: (165) E.L.T.48'7 (sen ' '3
6. HavingA'heard:.the for the parties, it would be .nVeoe:..ssV_a'ry 'to&V"-extract the relevant provision of Central Excise Ruies'na"n.'1_e1y ruie 57AA and the same reads as follows:
._ - ii'?/;1,1:vit"."57AAi.wb€finiUO1'1SZ- For the purpose of this _ C. Se1¢tirjn;~--''--..
. (a) ;*.i:ja.p'i=ta1 goods" means-
~~ v"";.[i) aii goods falling under Chapter 82, H Chapter 84, Chapter., Chapter 90, heading No.68.02 and subwheading No.68.01 of the First Schedule Central excise tariff Act, 1985: _ V
(ii) Components, spares and accpeés-stories _o.
the goods specified-;;';'aboVe;''_' ' V A
(iii) Moulds and dies:
rrf [iv] refractories' and refractory materiaisz [V] tubes and"pi:pes and * fittings thereof, used in the factory and i if {Vi} po11u~t_io'n_ 'co_nt21f01. equvé_pr'n.ent; {vii} {storage 'f'taVnIi]__ V V _ used in _tlie factdry itiie-.;nanuVfacturer of the final Expianatio;n:w ofj. doubts, it is hereby do not include any equipment' o'r"app.1_iance_.s used in an offi ..... .. _(b} "e:>Een_ipteed- means goods which are exempt from ____ the ..... ..duty the duty of excise lexriabie-..Vthereon, and includes goods which are to "Nil" rate of duty;
[cj""fin2aI products" means excisable goods manufactured or produced from inputs, except . pp 4/ //I matches;
(cl) "input" means all goods, except high speed diesel oil and motor ......... ..commonly knov§rn__'as petrol, used in or in relation to the manufacture * final products whether directly or : V' whether. tained in the finalmproduct"or..:1'i0t;"V.aI1d includes accessories of along with the final productfigoods as packing material, or__as_sfuel,A'or for electricity or steam usedlfobr rnanufiacture final products or for any ,._p,urpose, the factory of production; am? lubricating oils, greases, cutting- oils "arid.
fi(ExplaVnla;tio_n'<.[) speed diesel oil or motor spirit comraonly as petrol, shall not be treated as an iiiputffor the purpose whatsoever. :(Expi1anation""2'.'¥ Inputs include goods used in the
-vrriantifavcture of capital goods which are further irithe factory of the mar1ufacture.)"
"$5., It is to be noticed that the storage tank is inserted 'uraderllldthe definition of capital goods by notification ?
30 No.6/2001~C.E.{N.T), dated l~3~200l and the period involved in the present case being 12«»5~2001 to...ip3vi~1j_'¥i?,V_C)O.?. namely the period for which the Cenvat/ been denied would definitely be applicable».i,fI~..th*e: i«nstant.. case. The Tribunal in identical icircumstances'-chatting noticed the said arnendrnenifand hav.i_ng exteindeddithe , in respect of storage tank for product underdthe Cenvat Credit Rules which istaiso ._rna'teria Withuthe Central Excise Rules, 1957, vveflarep ctlfide opinionihat the Tribunal as well as the' Appellate Audtliloiityfwere not justified in rejecting t,liel'd'r:lairn.pof assessee for availing the Modvat credit. it it it 8*. In so"far___a_sp.'the judgments relied upon by learned , 1counspei.for"'r.e_spondent revenue it is seen that in Damodar Paper Mills Ltd., and Thungabhadra Steels'--leases were all prior to the insertion of "storage "ta..:4_1ksV'"" under the head capital goods in Rule 57AA. Hence, £1- 11 this definition of storage tank not being under conjsiéleration in those judgments, We are not persuaded to aeeeptj iudgments relied upon by the __llearnedj'.eounsel'.°fo_ij revenue. Thus, we hold the said.pjui:f1_Agnients'would:hg£::a1fi¢ applicable to the facts of theta'e.e. V l
9. The definition of th.e:"vcapital goods itself being explicit and clear we are of the that the Tribunal was in error in ignoring" .....pv"'eapital goods' as enumerated in In» ofmthe above, we are of the opinio-n_:1;hat':::i:lie "substantiaisuestion which had been forrnulated to be answered in favour of the appelliantva_ssess'ee 'and against the revenue in so far as A_ q1V:1eis.tio_n Nos. A1"'an_d.t2 are concerned. In so far as question ' is the Tribunal having itself come to the that the storage tanks are not moveable prolperty, could not have held that the assessee would not .. be--entitled to the benefit of Modvat credit. In so far as this Q".
12
finding of the Tribunal is concerned Smt.Veer1ja'=iJad1aav would hasten to add that it is an error in ordefhsittof Tribunal. ._
10. Be that as it may, since Wed.
Virtue of insertion of 'storageu tantk-'v. nndeiflth§e»£iVefi3nitio11t"
'capital goods' question No.3"-._d'o.es not. arise for our consideration considering the fact.s'anddteézfcunlstances of the case. In View of theAabo_Ve t'ind.in'g,"vth'el_'fo11owing order is passed:
appéais/i's«.aI1r)n?ed'.V..Qnestions 1 and 2 are answered in favourttof theasse'ssee%appe11ant and against the revenue.
-"-M NfiféoSts,_ "'=-.M. ..... 35f:
Judge safe q.'SMV't Euége