AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (1) TMI 1059
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....he facts involved in other appeals filed by M/s.SAIL & also by the Revenue, hence, need to be stated separately. 2.1 In Tata Steel's case, the facts in brief are that the appellant entered into correspondences with the Revenue beginning with their letter dated 08.10.2013, with a request to inform whether CENVAT Credit on rails and other track materials, namely, sleepers, paints and crossings etc. were eligible as inputs. Revenue responded through its letter dated 17.10.2003 informing that the goods in question do not merit inclusion in the category of 'inputs' as the same do not go into the mainstream of the process of manufacture either directly or indirectly, nor included in the list of goods mentioned in the definition of Rule 2(g) of CENVAT Credit Rules, 2002. The appellant again requested through their letter dated 01.12.2003 pressing further that the definition of 'inputs' as prescribed under Rule 2(g) of CCR,2002 allows credit on items used in or in relation to the manufacture of final product, whether directly or indirectly or whether contained in the final product or not; and since the rail track materials were used in their works for bringing raw materials and dispatchin....
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....als. 2.4. The other two appeals bearing Nos.E-135 & 136/10 are filed by the Revenue challenging the order passed by the Commissioner of Central Excise(Appeals), who, by a common order disposed two Orders-in-Original holding that CENVAT Credit on rails are admissible. 3. The learned Sr. Advocate Dr.Samir Chakraborty appearing for the Appellants, namely, M/s.Tata Steel Ltd. and M/s.SAIL submitted that the dispute of eligibility to CENVAT Credit on the inputs/capital goods viz. rails, railway track materials is common to all the appeals and facts are more or less similar. He has submitted that rails and other materials such as sleepers, points and crossings used in laying of railway tracks for movement of material, handling equipments and also in the overhead cranes in the appellants respective steel works at Jamshedpur/Durgapur. These rails were used for movement of raw materials as well as finished products inside the factory premises, wherein dutiable iron and steel products were manufactured, hence eligible to CENVAT Credit as capital goods/inputs. 3.1 Further, elaborating the function of the railway tracks within the factory premises, learned Sr. Advocate has submitted that r....
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....d that while disposing the SLP carried out against the said judgement of the Hon'ble Jharkhand High Court, Hon'ble Supreme Court has made it clear that the Tribunal shall decide the matter on merits uninfluenced by the observations made in the said judgement of the High Court. Further, he has submitted that the observations at para 12 & 13 of the judgement of the Hon'ble Jharkhand High Court would not longer be considered as good law, in view of the findings of the Hon'ble Supreme Court in Jayaswal Neco Ltd.'s case (supra). 3.4 In respect of appeals filed by M/s.SAIL, challenging the contention of the Revenue that M/s.SAIL had declared and accounted the railway sleepers and rails as capital asset and consequently even though no depreciation might have been availed for the purpose of Income Tax on that part of the value representing Central Excise duty, the depreciation benefit having been enjoyed on the value of the rails, net of central excise duty, the claim for CENVAT Credit on inputs is to be disallowed, it is his contention that the Revenue's allegation is not only factually erroneous, but also irrelevant in determining whether or not CENVAT Credit under the CENVAT Credit Rul....
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....on that CENVAT Credit allowed on all goods covered by a Central Excise Tariff either as "inputs" or "capital goods" subject to the exceptions specified and fulfilment of conditions laid down under the CENVAT Credit Rules, it would be seen that except those goods which are defined as capital goods under Rule 2(b)/2(a) of CENVAT Credit Rules, 2002/2004 and thus specifically excluded from Rule 2(g)/2(k) of the CENVAT Credit Rules, 2002/2004, all goods which are used in or in relation to the manufacture of final products whether directly or indirectly, whether contained in the final product or not, are inputs. In support, he has referred to the decisions in the case of CCE v. Botliboi & Co.Ltd. 2010 (257) ELT 191(Guj.) and CCE v. Solaris Chemtech Ltd. - 2007 (214) ELT 481(SC). 3.7 Further he has submitted that in any event, assuming though denying that the said goods cannot be treated as inputs, it is submitted that they are capital goods within the meaning of Rule 2(b)(iii) /Rule 2(a)(A)(iii) of the CENVAT Credit Rules,2002/2004. There is no dispute that the plant and machinery like blast furnace, converters and LD plants are goods falling under chapter 84 of First Schedule t....
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....equent period in case of the same assessee or in relation to the case involving similar issue in case of any other assesse, the demands have been dropped. 4. Per contra, learned Special Counsel Shri D.K.Acharya for the Revenue submitted that before this Tribunal, now the Appellants have taken a diametrically opposite stand pleading that rails are capital goods and not inputs for the purpose of claiming CENVAT Credit on the same. It is his contention that the appellant's approach is nothing, but taking recourse of a new ground which was not placed before the original authority, hence should not be considered. It is his grievance that this was also not placed before Hon'ble Jharkhand High Court and being a new ground cannot be entertained ab initio in terms of Rule 5(2) and 5(3) of Central Excise (Appeals) Rules, 2001 read with CESTAT (Procedure) Rules, 1982. It is his contention that this ground was also not taken in their written memorandum of Appeal. 4.1 Elaborating his argument, the learned Special Counsel submits that before the original as well as before the Hon'ble High Court the appellant argued that rails were inputs and accordingly, the adjudicating authority had passed a....
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....2004, hence, not eligible to CENVAT Credit. 4.3 The learned Special Counsel further submitted that the judgment of the Hon'ble Supreme Court in Jaiswal Neco's case relate to discussion on eligibility of railway track materials used for handling raw materials under Rule 57Q of the erstwhile Central Excise Rules, 1944. It is his contention that even though the said judgement is recent one, but in respect of an old matter arose in the light of interpretation of then existing Rule 57Q where definition of capital goods was very broad, open-ended and amenable to interpretation of wide amplitude. The legislative intention was make the definition more specific. Accordingly, by Notification No.14/96-CE(NT) dated 23.07.1996 the definition of capital goods became almost chapter specific except some general items. Thus, the very basis on which rail has been considered as eligible to credit as capital goods under Rule 57Q no longer exists due to major amendment in the Central Excise law in this regard initiated by 1996 and culminating to CENVAT Credit Rules, 2002 and finally CENVAT Credit Rules, 2004. Now, capital goods means as per CENVAT Credit Rules, 2002/2004, seven items and except some g....
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....also in the overhead cranes. While claiming CENVAT Credit on these items, in the case of Appeal filed by M/s.Tata Steel Ltd., Rs. 1,05,28,426/- was claimed as inputs and Rs. 3,13,309/- as capital goods; whereas in the case of M/s.SAIL a total amount of Rs. 3,43,55,640 was claimed as inputs and Rs. 12,20,798/- as capital goods/-(in all the six Appeals). While recording reasons in denying CENVAT Credit, in M/s.Tata Steel Ltd.'s case, the ld. adjudicating authority mainly anchored his reasoning on the stand taken by them before the Hon'ble Supreme Court in their own case reported as 2005(181) ELT 301(SC) claiming exemption under a notification. In that case M/s Tata Steel Ltd. claimed that the locomotive, other machineries, the tracks and other transport equipment were covered by the expression 'machinery' which were exclusively used within the factory for the purpose of carrying raw materials, semi-finished goods etc., and parts for maintenance of such tracks, would definitely qualify for exemption. In the present case, however, the appellant had changed their stand and claimed that these goods were used as inputs which led the adjudicating authority to conclude that this change of s....
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....e shortcomings in the erstwhile Rule 57Q had been done away with after the introduction of new set of Rules governing admissibility of CENVAT Credit on capital goods and inputs. The present definition of capital goods is restrictive and chapter specific in comparison to the earlier provisions. Besides, it is his contention that since the appellants have all along been claiming the CENVAT Credit on rails as inputs they should not be allowed to change their stand and claim the benefit as capital goods before this forum. This argument has also been rebutted by the learned Sr.Advcoate referring to the judgements of this Tribunal in Krishna Sahkari Chini Mills Ltd. & Bhilai Steel Plants case(supra), wherein it is observed that there is no bar in changing the claim of admissibility of CENVAT credit either as capital goods or as inputs at any stage of the proceeding. We find force in the contention of the Ld. Advocate for the Appellant, in view of the principle laid down in the above two cases that credit cannot be denied merely on the ground that the claims to CENVAT credit have been changed at the Appellate stage from inputs to capital goods and vice versa. 5.6 Before addressing the i....
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....of the aforesaid principle, to the facts and circumstances of the present set of Appeals, Dr.Samir Chakraborty, ld. Sr.Advocate argued that following the aforesaid judgement of the Hon'ble Supreme Court and that of Hon'ble Rajastan High Court in Aditya Cement Ltd.'s case(supra), recently Commissioner of Central Excise, Ranchi dropped six periodical show cause cum demand notices involving total demand of Rs. 8.51 crores(approx.) issued for the subsequent period i.e. from March, 2008 to October, 2014 to M/s.SAIL. Taking shelter of the said Order and the photographs depicting use of rails and railway track materials, it is his contention that the process of manufacture and the use of rails mentioned in the Jayaswal Neco Ltd.'s case are thus undisputedly similar to the present cases, hence the said judgment is squarely applicable. He has further submitted that since the department has accepted and followed the principle laid down in above cases that CENVAT credit is admissible on rails and railway track materials under the new CENVAT Credit Rules, 2004, the department is precluded from challenging the applicability of the said judgment to the present case. In support, he has referred t....