2016 (8) TMI 840

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....nt took the view that since as per explanation 2, inserted vide Notification No. 16/2009-CE dated 07.07.2009 to Rule 2(k), Steel items such as MS Angles. LIS Channels, CTD or TMT bars and any other items used for making support structures of Capital Goods do not qualify for the benefit of input CENVAT Credit, was of clarificatory in nature and was applicable with retrospective effect. Therefore, a show cause notice was issued to the assessee vide O.R.No.7/2013-Hyd-I-Adjn., dated 19.03.2013 proposing to recover an amount of Rs. 22,01,431/-towards irregularly availed Cenvat Credit. Adjudicating authority confirmed the demand of Rs. 22,01,431/- under Rule 14 CCR read with Sec.11A(2) and proviso to Section 11A(1) of CEA along with interest under Rule 14 of CCR read with Section 11AB of CEA and imposed penalty of Rs. 22,01,431/- under Rule 15(2) of CCR read with Sec. 11AC of CEA. 2. Aggrieved of the impugned OIO, the respondent had preferred appeal before the Commissioner (Appeals), who vide order dated 30-06-2014 held that the credit availed on the subject MS/HR/SS items was admissible and set aside the order-in-original and allowed the appeal filed by the assessee with consequentia....

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....he Rules ibid b. The legislature has specifically defined the expression capital goods under the Rule 2(a) of the Cenvat Credit Rules, 2004. If the capital goods were to include every product which is somehow related to the manufacturing process, then there is no need to provide a definition of the term "capital goods". In the case of Rohit Pulp and Paper Mills Ltd Vs Collector of Central Excise [1990 (47) ELT 491 (SC)], relying on the Parle Exports and Tata Oil Mills cases, the Apex Court held that 'in interpreting the scope of any notification, the Court has first to keep in mind the object and purpose of the Notification. All parts of it should be read harmoniously in aid of, and not in derogation of that purpose'. When examined the in context of the above test laid down under the Cenvat Credit Rules, 2004, the subject items cannot be treated as capital goods as these items have been used for creation of supporting structures for Overhead Cranes, EOT Cranes, Factory Shade, Coal Pulverisers etc. Accordingly, the order the Commissioner (Appeals) allowing credit on these items viz. M.S. Plates, beam, flats angles, Sheets etc. is not legal and proper. c. As per above E....

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....aside. 5. On behalf of the respondent, learned advocate Shri P. Ramakrishna submitted that the impugned order is fair and legal. He submitted that the Commissioner(Appeals) found adequate evidence on record to hold that the subject MS/HR/SS items were used/consumed for the manufacture of various capital goods which in-turn were used within the factory for manufacture of dutiable final products and that these subject items ought to be treated as inputs. The learned advocate also submitted that the Commissioner(Appeals) was correct in holding that in view of demand on same issue for earlier period having been settled in their favour vide Order-in-Appeal No.62 & 63/2006 (H-I) CE dt. 16/10/2006, subject issue was well within the knowledge of the Department and hence the demand was barred by limitation. 6. I have heard both the sides and have also gone through the facts of the case. I find that the issues were came up in this appeal are as follows:- (a) Whether amendment of Explanation 2 to Rule 2(k) of CCR inserted vide Notification No. 16/2009-CE dt. 07/07/2009 will have retrospective effect in this respect of the respondent. (b) In view of an Order-in-Appeal No.62 & 63/20....

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....c., used in its fabrication were to be treated as accessories in terms of Sl. No. 5 of the table ibid. This ruling was rendered by applying the "user test". The facts of the present case are perfectly analogous to those of Rajasthan Spinning & Weaving Mills Ltd. (supra). It is not in dispute that MS angles, plates, etc., were used to fabricate structural support for machinery which was used for manufacturing excisable goods. It is, again, not in dispute that the machinery is squarely covered by clause (i) of Rule 2(a)(A) of the CCR, 2004. The immediate question is whether the structural support for the machinery could be treated as 'capital goods'. Indeed, it should be held to be an integral part of the machinery and hence to be covered by clause (i) ibid. If that be so, as held by the Hon'ble Supreme Court in the aforesaid case, the plates, angles, etc., used for fabricating structural support are liable to fall within the purview of clause (iii) of Rule 2(a)(A). In the result, it has to be held that the MS angles, plates and rounds used by the respondent for fabricating structural support for machinery would qualify to be 'capital goods' for CENVAT credit. Consequently, the impug....

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.... law had defined to reference to the past events. But given rights and liabilities fixed by reference to the past facts, matters or events, the law appointing or regulating the manner in which they are to be enforced or their enjoyment is to be secured by judicial remedy is not within the application of such a presumption". Thus the doctrine of fairness is also an important requisite in giving retrospective effect to amendments. In case, benefits were extended and availed as permitted in earlier law, it would be unfair to snatch them away simply by insertion of an amendment to that effect. An amendment which seeks to lend further clarity to an existing statutory provision can definitely be retrospective if so unequivocally stated so in the body of the amendment or in the statement purpose by the legislature, however such amendment can only throw more light on a existing provision but should not extinguish the rights availed of before the amendment. I find that this view also finds sustenance in the decision of Tribunal in the case of CCE, Delhi-I Vs. Sharp Menthol (India) Ltd. [2015 (328) ELT 543 (Tri. Del.)]. The relevant portion is reproduced below:- 8.2.2 In thi....

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.... and held that the Tribunal was justified in allowing the assessee's contention in respect of the very same assessee. 13. The present appeal is also in respect of the very same assessee and therefore we find no distinguishable fact or issue contrary to the earlier decision of this Court. 14. It is relevant to note that this Court in the decision reported in 2014-TIOL-1185-H-Mad-CX = 2014 (310) E.L.T. 636 (Mad.) in respect of the very same assessee in C.M.A. No. 1265 of 2014, following the abovesaid decision of this Court, dismissed the appeal filed by the Revenue. 15. Accordingly, following the principles laid down in the decision reported in 2010 (255) E.L.T. 481 (Commissioner of Central Excise, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd.) and the earlier decisions of this Court in C.M.A. No. 3101 of 2005, dated 13-12-2012 and C.M.A. No. 1265 of 2014, dated 10-7-2014, we are inclined to allow the appeal, thereby set aside the order of the Tribunal. Accordingly, this civil miscellaneous appeal stands allowed. No costs. Consequently, M.P. No. 1 of 2011 is closed. 10. Corning to the issue of limitation, in view of the discussions sta....