TaxTMI 
TaxTMI 
2017 (7) TMI 524
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....ner of Central Excise 2010 (253) E.L.T. 440. The judgment, rendered in: Vandana Global Limited V. Commissioner of Central Excise favours the Revenue. 3. We were informed by the counsels for the parties that a challenge has been laid to the decision of the Tribunal rendered in: Vandana clothing Limited V. Commissioner of Central Excise, and that it is pending consideration before the concerned Court, i.e., the Chhattisgarh High Court. 4. These appeals were admitted by this Court on different dates. C.M.A.No.3814 of 2011 was admitted on 22.12.2011, when, the following substantial question of law was framed for consideration by this Court: "Whether the order of the learned Tribunal inasmuch as it gives effect to the notification No.16/09 prior to 7.7.2009, overlooking the fact that the same is made expressly effective only from the aforesaid date?" 4.1. Whereas, C.M.A.Nos.2695 and 2696 of 2012 were admitted on 06.09.2012, when, the following substantial questions of law were framed for consideration by this Court: "1. Whether the order of the Tribunal is right in law inasmuch as it gives effect to the notification No.16/09 prior to 7.7.2009, overlooking the fact that the same is ....
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....particulars was carried out by the officials of the Revenue, which revealed that TAS had availed of Cenvat Credit, during the period, spanning between, February, 2008 and March, 2008, vis-a-vis HR plates, MS channels and MS Joints, which, in turn, were used as "supporting structurals" to keep in position distillation machinery and evaporator (hereinafter referred to as structurals). 7.4. The Revenue, being of the view that the Cenvat Credit availed of qua aforementioned structurals, being not in order, served a show cause notice dated 25.02.2009, on TAS. The allegation in the show cause notice, qua TAS was that the structurals, which fell under Chapter 72 were not covered by the definition of capital goods, as provided in Rule 2 of the Cenvat Credit Rules, 2002 (in short, the '2002 Rules'). According to the Revenue, Cenvat Credit was only available, vis-a-vis goods falling in Chapter 82, 84, 85, 90 and heading 68.05 or 68.04. Since, the structurals came within the ambit of Chapter 72, Cenvat Credit, according to the Revenue, was wrongly availed of by TAS. 7.5. Furthermore, it was also alleged that the structurals could neither be termed as components, spares and/or access....
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....ioned order, TAS preferred an appeal to the Commissioner of Customs and Central Excise (Appeals) [in short 'Commissioner (Appeals)]. The Commissioner (Appeals) allowed the appeal preferred by TAS vide order dated 29.06.2010. In passing the order, the Commissioner (appeals) relied upon the judgments, passed by the Tribunal. 11. This time around the Revenue was aggrieved and, therefore, an appeal was preferred with the Tribunal. The Tribunal, via a cryptic judgment reversed the order of the Commissioner (Appeals) by relying upon its own judgment, rendered by a Larger Bench, in Vandana Global Limited. 12. It is, in these circumstances that TAS has preferred an appeal with this Court. C.M.A.Nos.2695 and 2696 of 2012: 13. DCBL, which is the appellant in the aforementioned appeals, is in the business of manufacturing of Cement and Clinker, falling under Chapter Heading 2523.29 and 2523.90 of the Central Excise Tariff Act, 1985, (in short, "CETA"). DCBL, it appears, during the relevant period, was in the process of expanding its Cement Plant, located within the factory premises, situate in Dalmiapuram. DCBL, evidently, was desirous of creating additional manufacturing capacity, eq....
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...., Delhi 2011 (270) E.L.T. 465 (SC). 13.6. To be noted, while the demand for duty and interest was confirmed, the demand for penalty was set aside. 13.7. DCBL, being aggrieved, has preferred the captioned appeals. 14. The issues which arise for consideration in all the three (3) appeals, according to us, are common. 14.1. The first issue that requires consideration is: whether the structurals, cement, iron and steel, which are used in constructing foundations, would fall within the ambit and scope of Rule 2(a)(A)(iii), read with Rule 2(a)(A)(i) of the 2004 Rules. In other words, whether they could be treated as components, spares and/or accessories of the capital goods, referred to in Rule 2(a)(A)(i) of the 2004 Rules. In the alternative, it is submitted by both the Assessees, i.e., TAS and DCBL, that the said structurals, cement, and iron and steel, would fall within the definition of Rule 2(k), read with Explanation 2 of the 2004 Rules; which, therefore, is the other issue, that is, required to be considered by us. 14.2. In addition to the aforesaid, and in support of their arguments, both parties have relied upon Notification dated 16/2009, dated 07.07.2009, whereby, Explana....
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....n Rule 2 (k) was brought into force from the date of its publication in the official gazette and not retrospectively. 16.5. In support of his submissions, learned counsel relied upon the following judgments: (i) CCE V. Rajasthan Spinning and Weaving Mills 2010 (255) ELT 481 SC (ii) CCE V. India Cements Ltd. 2012 (285) ELT 341 (Mad) (iii) CCE V. India Cements Ltd. 2014 (310) ELT 636 (Mad) (iv) CCE V. India Cements Ltd. 2014 (321) ELT 209 (Mad) (v) Dalmia Cements (Bharat) Ltd. V. CCE 2016 (341) ELT 102 (Mad) (vi) Thiru Arooran Sugars V. CCE 2015 TIOL 1734 -HC-Mad. (vii)Mundra Ports & Special Economic Zone Ltd. V. CCE & Cus 2015 (39) STR 726 (Guj.) 17. As against this, Ms.Hemalatha relied upon the orders of the Authorities below and, in particular, adopted the line of reasoning taken in the orders-in-original. 17.1. Learned counsel submitted that since, the structurals came within the ambit and scope of Chapter 72, they could not be considered as components or accessories of capital goods, which fell under different Chapters, as could be seen on a bare perusal of Rule 2(a)(A)(iii) of the 2004 Rules. The argument being that, unless the components and accessories fall within t....
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....rospective in nature. 17.8. For this purpose, learned counsel relied upon the judgment of the Division Bench of the Karnataka High Court in the matter of: Deputy Commissioner of Commercial Taxes V. Bellary Steels & Alloys Ltd. [2008] 11 VST 361 (Karn). Furthermore, learned counsel contended that the decision applicable to the facts of this case was the judgment of the Supreme Court rendered in: Saraswathi Sugars V. Commissioner of Central Excise, Delhi 2011 (270) ELT 465 (SC). 17.9. Learned counsel further submitted that though this judgment was delivered in the context of Rule 57Q of the Central Excise Rules, 1944 (in short, the '1944 Rules'), the provisions being pari materia, the judgment rendered in the said case would be applicable to the instant matters as well. Reasons : 18. We have heard learned counsel for the parties and perused the record. 19. The facts in the three (3) appeals, are not in dispute. All three matters pertain to a period, prior to 07.07.2009. Therefore, apart from the fact that we have been called upon to decide as to whether the 2009 Notification would have retrospective effect, we are also called upon to rule on as to whether or not structur....
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....al goods produced or manufactured - (a) in a free trade zone and used for the manufacture of final products in any other place in India; or (b) by a hundred per cent export-oriented undertaking or by a unit in an Electronic Hardware Technology Park or by a unit in Software Technology Parks and used for the manufacture of final products in any place in India, shall be restricted to the extent of duty which is equal to the additional duty leviable on like goods under section 3 of the Customs Tariff Act, 1975 (51 of 1975) equivalent to the duty of excise paid on such capital goods. Explanation - For the purposes of this section, - (1) "capital goods" means - (a) machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products; (b) components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose; and (c) moulds and dies, generating sets and weigh-bridges used in the factory of the manufacturer. (d) following goods falling within the Schedule to the Ce....
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....he said capital goods. 2. It has been brought to the notice of the Board that clause (d) of Explanation (1) is being interpreted by some of the field officers covering only such components, spares and accessories which would fall under Chapter shown under clauses (a) to (c) and credit is allowed only on those components, spares and accessories which are covered under the said chapters. 3. The matter has been examined. With effect from 23.7.1996, capital goods eligible for credit under rule 57Q have been specified either by their classification or by their description. Clause (a) to (c) of Explanation (1) of the said rule cover capital goods by their classification whereas clause (d) covers goods by their description viz. components, spares and accessories of the said capital goods. It may be noted that there is a separate entry for components, spares and accessories and no reference has been made about their classification. As such, scope of this entry is not restricted only to the components, spares and accessories falling under Chapters 82, 84, 85 or 90 but covers all components, spares and accessories of the specified goods irrespective in rule 57Q (i.e. prior to 23.7.1996) wh....
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.... the test laid out by the Supreme Court in: Commissioner of Central Excise V. Jawahar Mills Ltd., 2001 (132) ELT 3 and in Commissioner of Central Excise, Jaipur V. Rajasthan Spinning & Weaving Mills 2010 (255) ELT 481, held that the aforesaid items will fall within the scope and ambit of the definition of 'capital goods', set out in Rule 57Q. The observations made by the court in paragraph 7 and 8, being apposite, for the sake of convenience, are extracted hereafter: "7. As far as the Crane with accessories and Loader are concerned, there cannot be any difficulty in holding that they will come within the items of machinery or equipment used for production or processing of any goods for the manufacture of final products. As has been held by the Apex Court in Jawahar Mills Limited's case, the Rule makes it explicitly clear that the order of the Tribunal in dismissing the appeal preferred by the Revenue in respect of these two items and remitting the matter for fresh consideration in regard of the Bulldozer requires no consideration. As far as the other items, namely, Rebar Coils, CTD Bars, TOR Steel and Cement are concerned, as to whether they are capital goods or not, t....
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....decided case that the machineries purchased by the assessee were machineries themselves. Thus, after referring to the decision reported in 2010 (255) E.L.T.481 (Commissioner of Central Excise Jaipur V. Rajasthan Spinning & Weaving Mills Ltd.), the Apex Court held that in view of the findings rendered by the Tribunal that the machineries were complete and having regard to the meaning of the expression "components/parts", with reference to the particular industry in question, the Apex Court rejected the appeal filed by the assessee. 11. Thus going by the factual finding, which are distinguishable from the facts found by the Authorities below in the case on hand, we have no hesitation in rejecting the Revenue's appeal, thereby confirming the order of the Tribunal. 12. Learned standing counsel appearing for the Revenue pointed out that the Tribunal had merely passed a cryptic order by referring to the earlier decisions. We do not think that this would in any manner prejudice the case of the Revenue, given the fact that on the identical set of facts, the assessee's own case was considered by this Court and by following the decision reported in 2010 (255) E.L.T.481 (Commission....
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....rvice Tax Appellate Tribunal and another 2015-TIOL-1734-HC-Mad-Cx, a Division Bench of this Court, was, called upon to decide the following question of law: "Whether the order of the learned Tribunal inasmuch as it gives effect to the notification No.16/09 prior to 7.7.2009 overlooking the fact that the same is made expressly effective only from the aforesaid date?" 28. The Division Bench allowed the appeal and, set aside the order of the Tribunal. In effect, the Court held that the 2009 Notification would not come in the way of TAS, in that case, in claiming that the structurals, which were purchased and utilised for keeping in position the plant and machinery could be treated as inputs, within the meaning of Rule 2 (k) of the 2004 Rules, for the period prior to its issuance, i.e., 07.07.2009. 29. Therefore, besides anything else, what clearly comes to fore is that the various Division Bench of this Court have consistently ruled in favour of different Assessees in holding that structurals, which are used to keep in position plant and machinery and, cement, as also, iron and steel, which are used to erect foundations, which, in turn, hold the plant and machinery could, not only ....
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....hich, even according to the Revenue, are capital goods, within the meaning of Rule 2(a)(A) of the 2004 Rules, as they fall in the Chapters referred to in sub-clause (i) of the very same Rule, would, in our view, take within its sway 'inputs', which come within the ambit and scope of Rule 2(k) read with Explanation 2; the only limiting condition being that these inputs should be used within the factory of the manufacturer. 31.5. Therefore, according to us, structurals, cement, as also, iron and steel, which are used to erect foundations, would come within the definition of 'input' as they form part of the capital goods, which, in turn, are used in the manufacture of final product. The manner in which the Revenue seeks to read the provisions of Explanation 2 is flawed for the reason that the said Explanation cannot restrict the scope and ambit of the main provision, i.e., Rule 2k(i). Explanation 2 cannot be read in a manner that it constricts, the scope and ambit of the main provision, i.e., Rule 2k(i). 31.. To our minds, if, there was any ambiguity, the same stands clarified with the issuance of the 2009 Notification. As correctly argued on behalf of the TAS and DC....
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...., issued by the Revenue, whereby, an earlier exemption notification dated 28.08.1993 was sought to be explained. The notification dated 28.08.1993, which was issued in exercise of power under Section 8 A of the Karnataka Sales Tax Act, 1957, exempted tax payable under the said Act, in respect of goods manufactured and sold by a new industrial unit, located in zones specified in column 3 of the said notification, albeit, for a particular period. The said notification also exempted tax payable under the said Act by an industrial unit making investment for expansion or diversification or modernisation on or after 12.07.1993, qua units located in the zone, once again, specified in column 3 of the very same notification. The notification carried two Explanations i.e., Explanation (I) and Explanation (II). While Explanation (I) defined the meaning of the expression "tiny industrial unit", "small-scale Industrial Unit", "medium Scale industrial unit" or "large scale industrial unit" and "new industrial unit", Explanation (II) provided the method of quantification and extent of tax exemption under the notification. Clause (iii) to Explanation (II), which read as under, was sought to be sub....
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....he date of publication of the Notification. 35.1. For the sake of convenience, the relevant part of the Notification is extracted hereafter: ".....1. (1) These rules may be called the CENVAT Credit (Amendment) Rules, 2009. (2) They shall come into force on the date of their publication in the Official Gazette. 2. In the CENVAT Credit Rules, 2004 (hereinafter referred to as the said rules), in rule 2, in clause (k), in Explanation 2, after the words factory of the manufacturer, the following shall be inserted, namely:- but shall not include cement, angles, channels, Centrally Twisted Deform bar(CTD) or Thermo Mechanically Treated bar(TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods Notification No.16/2009 Central Excise (N.T.) New Delhi, the 7th July, 2009 . (Emphasis is ours) 36. A plain reading of the relevant parts of the Notification, which have been emphasised by us, would bring forth the point which we have sought to articulate herein above, that is, intrinsic evidence points in the direction that the notification is not retrospective. 36.1. If, that be the conclusion,....
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....ate of it publication and not retrospectively. Therefore, the extracted speech, by itself, in our opinion, would not help the cause of the Revenue. 39. As indicated above, in Mundra's case, the Gujarat High Court made observations in this behalf, which being relevant, are extracted hereafter:. "8. Mr. Y.N Ravani, learned counsel for the revenue has placed reliance on the decision of the Larger Bench of the Tribunal in Vandana Global Limited v. Commissioner of Central Excise, Raipur, 2010 (253) E.L.T 440. We have carefully gone through the decision of the Larger Bench of the Tribunal. We do not find that amendment made in Cenvet Credit Rules 2004 which come into force on 7.7.2009 was clarificatory amendment as there is nothing to suggest in the Amending Act that amendment made in Explanation 2 was clarificatory in nature. Wherever the legislature wants to clarify the provision, it clearly mentions intention in the notification itself and seeks to clarify existing provision. Even, if the new provision is added then it will be new amendment and cannot be treated to be clarification of particular thing or goods and/or input and as such, the amendment could operate only prospectiv....
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....)." 41.1. The Court was, thus, clearly dealing with an exemption notification, and after applying a strict rule of construction, came to the conclusion that unless it is demonstrated that iron and steel structures, (which were claimed as component parts, within the meaning of sub-rule (5) of Rule 57Q), were essential in the manufacture of the sugar manufacturing unit or in the composition of the sugar manufacturing unit, they would not come within the ambit of the aforementioned exemption notification. 41.2. It is pertinent to note that during the course of argument, the Assessee had relied upon the 1996 circular, to which, we have made a reference above. The Supreme Court, as it clearly emerges upon a perusal of para 22 of the judgment, indicated that since, the circular was not produced before the Tribunal, it was justified in reaching a conclusion, which went against the interest of the Assessee, in that case. The Court, however, concluded by saying that since, they had ruled that the iron and steel structures were not components of machinery used in the installation of sugar manufacturing plant, the observation made, qua the 1996 circular would not come to the assistance of t....
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.... equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products; (b) components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose; and (c) moulds and dies, generating sets and weighbridges used in the factory of the manufacturer. 12. Inter alia observing that capital goods can be machines, machinery, plant, equipment, apparatus, tools or appliances if any of these goods is used for producing or processing of any goods or for bringing about any change in the substance for the manufacture of final product, although this view was expressed in the light of the aforenoted definition of "capital goods" in the said Rule, which is not there in Rule 57Q, as applicable in the instant case, yet the "user test" evolved in the judgment, which is required to be satisfied to find out whether or not particular goods could be said to be capital goods, would apply on all fours to the facts of the present case, in fact, in para 6 of the said judgment, the court noted the stand of the learned Add....