2015 (9) TMI 1381 - AT - Central Excise

Tribunal Grants Credit on Kiln Equipment, High Court Reverses Decision

The India Cements Ltd. Versus Commissioner of Central Excise, Trichy

The Tribunal allowed credit on parts of surface miners and CCTV Cameras used in the Kiln, and granted 100% credit on goods imported under project imports ... Denial of credit on parts of surface miners used in the mines - Availment of credit on CCTV Cameras used in the Kiln - Whether percentage of eligibility of credit is 75% or 100% on the goods cleared under project imports prior to 1.3.1997 - Held that:- As per the directions of the Hon’ble High Court, Madras, we have examined the admissibility of credit on each of the inputs used in the mines and whether the appellants have their own captive mines. This Tribunal in CCE Trichy Vs The India Cements Ltd.[2015 (9) TMI 1391 - CESTAT CHENNAI] in appellant s own case dealt the issue of use of capital goods and inputs in their own captive mines. Therefore, there is no dispute on the use of parts of surface mines in the capital goods at mines. Further, we find that in the appellant's own case, the Tribunal in the case of CCE Trichy Vs India Cements reported in [2009 (10) TMI 701 - CESTAT CHENNAI] had held that credit on Lubricants used in machinery like surface miner, dumper, etc. in captive mines and are admissible for credit. It is seen that there are a large number of decisions holding the eligibility for capital goods which are used in the mines and outside the factory premises. Appellants are eligible for credit on parts of surface miners. Further, we find that the goods were imported under project import as is evident from the show cause notice and rightly classifiable under 9801 and not under chapter 8430. The act of the department in seeking to classify the goods under Chapter 8430 as against 9801 being clearly traversing beyond the show cause notice, is not sustainable in law. - As regards admissibility of 100% of credit on the project import goods, we find that credit goods were imported in March 1996. We find that on a perusal of D-3 declaration submitted on 22.3.96 which is annexed in page 23 and 24 of the paper book, the capital goods were received in the factory on 22.3.96. Therefore, the date of receipt of capital goods in the appellant's unit is relevant. - appellants are eligible for credit on parts of surface miners, CCTV Cameras installed in the Kiln and they are also eligible for 100% credit on the CVD paid on the goods imported under project imports. Accordingly, the impugned order is set aside Issues Involved:1. Denial of credit on parts of surface miners used in the mines2. Availment of credit on CCTV Cameras used in the Kiln3. Eligibility of 100% credit on goods cleared under project imports prior to 1.3.1997Analysis:Issue 1: Denial of credit on parts of surface miners used in the minesThe appeal was taken up for fresh hearing as per the High Court's order, which set aside the Tribunal's previous order for lacking detailed reasoning. The appellant argued that parts of surface miners used in the mines are eligible for credit based on previous judgments. The Tribunal examined the admissibility of credit on inputs used in the mines and confirmed the eligibility based on various precedents and the appellant's own case law. The High Court's decision in a related case supported the appellant's claim, allowing credit on parts of surface miners.Issue 2: Availment of credit on CCTV Cameras used in the KilnThe appellant contended that CCTV Cameras used inside the kiln for monitoring the manufacturing process are eligible for credit, citing relevant case laws. The Tribunal agreed with the appellant, stating that CCTVs are essential for monitoring the manufacturing activity and thus eligible for credit. Precedents and the specific use of CCTVs in the production process supported the Tribunal's decision to allow credit on CCTV Cameras.Issue 3: Eligibility of 100% credit on goods cleared under project imports prior to 1.3.1997Regarding the eligibility of 100% credit on goods cleared under project imports before 1.3.1997, the Tribunal analyzed the relevant dates of receipt of capital goods and the applicable rules. The Tribunal held that since the goods were received in the factory prior to the date when the 75% credit restriction came into effect, the appellant was entitled to 100% credit on the goods imported under project imports. The decision was supported by previous case law and the specific circumstances of the appellant's case.In conclusion, the Tribunal allowed credit on parts of surface miners, CCTV Cameras used in the Kiln, and granted 100% credit on goods imported under project imports before 1.3.1997, based on detailed analysis, precedents, and the specific facts of the case. The impugned order was set aside, and the appeal was allowed in favor of the appellant.