2017 (2) TMI 1071

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....ed CENVAT credit amounting to Rs. 3,03,61,027/- and ordered for its recovery along with interest. A penalty of Rs. 50/- lakhs was also imposed on the appellant under Rule 15 of the CENVAT Credit Rules, 2004. The impugned order dated 10.7.2007 is under challenge before the Tribunal. 2. With the above background, heard Shri M.S. Nagaraja, learned advocate for the appellant as well as Shri Mohammad Yousuf, learned AR for the Revenue. 3. For the construction and erection of the blast furnace and coke over plants, the appellant had entered into agreements with (i) M/s. Euro Ikon Iron and Steel (P) Ltd. (EIISPL) for blast furnace; and (ii) M/s. Euro Coke and Energy (P) Ltd. (ECEPL) for coke oven plant. Both the companies were incorporated as Special Purpose Vehicles (SPVs) for setting up the capital goods as above and were subsequently merged with the appellant. HR plates and sheets, etc., manufactured by the appellant and used for setting up of blast furnace and coke over plants were cleared on payment of duty in favour of EIISPL as well as ECEPL, respectively. The CENVAT credit as capital goods was availed by the appellant only after the merger of the two SPVs with the appellant. 3.....

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....ii. The contention in the impugned order that the Blast Furnace and Coke Oven Batteries manufactured by using the impugned goods seem to have attained immovability and hence not capital goods is not germane to the eligibility of the steel structurals as inputs used for manufacture of capital goods. The excisability of the resultant Capital Goods is not prescribed as a criterion in the CCR, 2004 for eligibility of the inputs used for manufacture of the capital goods. The only requirement for the goods to be considered as "capital goods" is that the resultant goods must be specified under Chapter 82, 84, 85, 90, etc., of the CETA, 1985 as specified in Rule 2(a)(A) of the CCR, 2004. In the instant case, CHH 8417 10 00 of the CETA, 1985 covers Blast Furnace and CHH 8479 8960 covers Coke Oven Plants and hence they are covered by the definition of "capital goods". iii. The Commissioner has erred in holding that the capital goods fixed to earth are immovable property. The Blast Furnace and Coke Oven Batteries have their own separate identity before they were fixed to earth. They could be dismantled to their constituent components or parts, transported, erected and commissioned at anothe....

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....98 (97) ELT 3(SC) ii. CCE vs. SLR Steels Ltd.: 2012 (280) ELT 176 (Kar.) iii. CCE, Raigad vs. JSW Ispat Steel Ltd.: 2015 (327) ELT 549 (Tri.-Mum.) iv. KCP Ltd. vs. CCE, Guntur: 2009 (237) ELT 500 (Tri.-Bang.) v. Balkrishna Industries Ltd. vs. CCE, Jaipur: 2016 (335) ELT 559 (Tri.-Del.) vi. JSW Steel Ltd. vs. CCE, Salem: 2014 (307) ELT 929 (Tri.-Del.) 5. Learned DR supported the impugned order. He submitted that the blast furnace as well as coke oven plant cannot be considered as capital goods. Both these are in the nature of very huge structures and are constructed stage-by-stage at site. Because of the substantial civil work involved in the construction, they have attained immovability and cannot be dismantled without completely destroying them. Consequently, they cannot be considered as capital goods within the definition of CCR, 2004. Further, he submitted that the structural steel items used for the construction of the above cannot be considered as inputs also. Since these cannot be allowed under the category of inputs or capital goods, he submitted that the impugned order may be upheld and CENVAT credit ordered for recovery. 6. The appellant availed CENVAT credit o....

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....ble property or as capital goods, it is useful to refer to the clarification issued by CBEC vide order No.53/2/98-CX dated 2.4.1998 in which the excisability of plant and machinery assembled at site has been clarified. The Board has referred to the decision of the Hon'ble Supreme Court in the case of Sirpur Paper Mills Ltd. [1998 (97) ELT 3 (SC)] and has prescribed the following broad criteria to be satisfied for considering the plant and machinery assembled and erected at site as excisable. i. The final product is distinct and apart from the components that have gone into its production. ii. It is specified in the Central Excise Tariff as excisable goods . iii. It is goods and to merit to be called goods , it must be movable and saleable. Whatever is embedded in earth, unless it is like a building or tree or similar things, must not be necessarily treated as immovable property, if the whole purpose behind attaching to a concrete base is to secure maximum operational efficiency and safety. iv. It can be sold in the market. It would be treated as marketable even though it may have to be removed from its base and dismantled, before being sold. 9. The claim of the appellant w....