Custom, Excise & Service Tax Tribunal
M/S Gujarat Plybond vs Commissioner Of Central Excise on 13 July, 2015
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad ****
Appeal No : E/10489/2013
(Arising out of OIA-SRP/205/DMN/2012-13 Dated 23/01/2013 passed by Commissioner (Appeals) of Central Exxise, Customs and Service Tax-DAMAN)
M/s Gujarat Plybond : Appellant (s)
Vs
Commissioner of Central Excise,
Customs and Service Tax-DAMAN : Respondent (s)
Represented by:
For Appellant (s) : Shri D.K. Trivedi, Advocate
For Respondent (s):Shri S. Shukla, Authorised Representative
For approval and signature:
Mr. H.K. Thakur, Honble 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?
No
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3.
Whether their Lordships wish to see the fair copy of the order?
Seen
4.
Whether order is to be circulated to the Departmental authorities?
Yes
CORAM:
MR. H.K. THAKUR, HONBLE MEMBER (TECHNICAL)
Date of Hearing/Decision: 13.07.2015
Order No. A/10996 / 2015 dated 13.07.2015
Per: H.K. Thakur
This appeal has been filed by the appellant with respect to OIA No. SRP/205/DMN/2012-13 Dated 23.01.2013. Under this OIA first appellate authority has upheld OIO No. VAPI-I/DEMAND (S.TAX)/08/2012-13 Dated 12.09.2012. The issue involved in this appeal is whether appellant will be eligible for CENVAT credit under Cenvat Credit Rules, 2004 with respect to Lead Ingots, used internal lining or coating of certain reaction vessels.
2. Shri D.K. Trivedi (Advocate) appearing on behalf of the appellant argued that certain chemical reactions are required to be undertaken by the appellant for manufacturing chemicals in the factory. That the chemical reactions are of corrosive nature and will damage the reaction vessels if the same are not coated with lead. Learned Advocate argued that coating of the vessels is an essential requirement in the manufacture of the chemicals therefore, lead ingots used for coating will be eligible for CENVAT credit. He relied upon the following case laws to argue that his clients are eligible to CENVAT credit:-
(i) Birla Corporation Ltd. vs Commissioner of Central Excise, Jaipur-II [2012 (276) E.L.T. 376 (Tri. Del.).
(ii) Century Rayon vs Commissioner of Central Excise, Mumbai-III [2004 (175) E.L.T. 120 (Tri. Mumbai)
3. Shri S. Shukla, (AR) appearing on behalf of the Revenue argued that lead ingots used for coating are not eligible for CENVAT credit as these are neither inputs nor capital goods. Learned AR also made the Bench go through Para 9 of the OIA Dated 23.01.2013 to argue that lead ingots are similar to welding electrodes used for repair of capital goods and will not be eligible for CENVAT credit as held by the Larger Bench Judgement in the case of Triveni Engg. & Industries Ltd. vs Commissioner 2005 (186) E.L.T. 158 (Tri. LB) and Andhra Pradesh High Court Judgement in the case of Sree Rayalaseema Hi-Strength Hypo Ltd. [2012 (278) E.L.T. 167 (AP)].
4. Heard both sides and perused the case records. The issue involved in the present proceedings is whether CENVAT credit will be admissible with respect to lead ingots, used for internal lining of chemical reaction vessels. Definition of capital goods given under Rule 2 (a) (A) of Cenvat Credit Rules, 2004 read as follows:-
(a) capital goods means:-
(A) the following goods, namely:-
(i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading No. 68.05 grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule to the Excise Tariff Act.
(ii) pollution central equipment:
(iii) components, spares and accessories of the goods specified at (i) and (ii);
(iv) moulds and dies, jigs and fixtures;
(v) refractories and refractory materials;
(vi) tubes and pipes and fittings thereof; and
(vii) storage tank, Used in the factory of the manufacturer of the final products, but does not include any equipment or appliance used is an office.
The case of the Revenue that lead ingots are neither components nor spares nor accessories of the capital goods. It is observed lead ingots directly cannot be either capital goods or used as components or spares of the reaction vessels. However, the word accessories are understood to mean anything, which improves the effectiveness of the main article in association of which the accessories are used. In the present proceedings lead ingots are used for internal lining of chemical reaction vessels. So, that the wall of reaction vessels do not get corroded. On the issue of admissibility of M.S. Plates, beam, angles, chennels etc., under the same provisions of CENVAT Credit Rules, CESTAT Delhi in the case of Birla Corporation Ltd. vs Commissioner of Central Excise, Jaipur-II (supra) has held as follows:-
3.1?The first point of dispute in these appeals is as to whether M.S. Angles, Channels, Plates etc. used for repair and maintenance of plant and machinery are eligible for Cenvat credit or not. On this issue, we find that Honble Rajasthan High Court in the case of Union of India v. Hindustan Zinc Ltd. (supra) has held that M.S./S.S. Plates used in the workshop for repair and maintenance of the machinery, which is used for the manufacture of final product are eligible for Cenvat credit. The Governments SLP against this judgment of Honble Rajas-than High Court has been dismissed by Honble Supreme Court vide judgment reported in 2007 (214) E.L.T. A115 (S.C.). Besides this, we find that Honble Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd. v. C.C.E., Raipur (supra) has held that welding electrodes used for repair and maintenance of the plant and machinery are entitled for Cenvat credit. In this judgment, Honble High Court relied upon the judgment of Honble Rajasthan High Court in the case of Union of India v. Hindustan Zinc Ltd. (supra) and in paras 21 and 22 of the judgment, Honble High Court with regard to the Revenues plea that the Tribunal in the case of Steel Authority of India Ltd. v. C.C.E. reported in 2008 (222) E.L.T. 233 (Tri.) had held that welding electrodes used for repair and maintenance of plant and machinery are not eligible for Cenvat credit and the SLP filed by M/s. SAIL against the Tribunals order has been dismissed by Honble Supreme Court in view of the facts of this case vide judgment reported in 2008 (229) E.L.T. A127 (S.C.), Honble High Court observed that refusal of special leave to file appeal by a non-speaking or speaking order does not attract the doctrine of merger, whereas where an award, appeal or revision is provided against the order passed by the Court, Tribunal or any other authority before a superior forum and such superior forum modifies, reverses or affirms the decision put in issue, the decision by the subordinate forum merges in the decision by the superior forum and it is the later which subsists, remains operative and is capable of enforcement in the eyes of law, as held by Honble Supreme Court in the case of Kunhayammed v. State of Kerala reported in 2001 (129) E.L.T. 11 (S.C.). In view of the judgment of Honble Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd. v. C.C.E., Raipur and of Honble Rajasthan High Court in the case of Union of India v. Hindustan Zinc Ltd. (supra), which is the Jurisdictional High Court for the present appeals, we are of the view that the items used for repair and maintenance of plant and machinery would be eligible for Cenvat credit and the Commissioner (Appeals)s order denying Cenvat credit in respect of the same is not sustainable. 4.1 In the above case CESTAT Delhi relied upon the case law of Union of India vs. Hindustan Zinc Ltd. [2007 (214) E.L.T. 510 (Raj.)] and Union of India vs. Hindustan Zinc Ltd. [2007 (214) E.L.T. A115 (S.C.)]. M.S. Plates, beam, angles, channels etc. are also not capable of being used directly as component or parts of the machinery for maintenance and repair. Further, CESTAT Mumbai in the case of Century Rayon vs Commissioner of Central Excise, Mumbai-III (supra) also held that lead ingots used for making corrosion resistant lining will be eligible for CENVAT credit.
5. According to the above observations and settled proposition of law CENVAT credit with respect to lead ingots used for protective coating/lining of the chemical reaction vessels will be eligible for CENVAT credit. Appeal filed by the appellant is allowed.
(Dictated and pronounced in open Court) (H.K. Thakur) Member (Technical) govind 5