TaxTMI 
TaxTMI 
2019 (12) TMI 1062
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....to June, 2009, the appellants have taken the CENVAT Credit on rails falling under Chapter 73 of the Tariff. The said rails have been utilised in the construction of railway-line from Muddanur Railway Station to the factory premises of the appellant which was to run for merely 10 kms. Department formed an opinion that neither the rails are capital goods nor the goods manufactured thereof i.e. the railway-line is excisable. Also the rails are not the goods to be used in the factory of the manufacturer of final products, but were to be used outside the factory. Hence, the availment of CENVAT Credit thereupon is not available. With this observation, a show cause notice bearing No. 72 dated 06.10.2009 was served upon the appellant proposing reversal of irregularly availed CENVAT Credit amount of Rs. 6,28,37,098/- alongwith the reversal of the CENVAT Credit for an amount of Rs. 1,59,42,153/- was proposed. The interest at appropriate rate and the proportionate penalties were also proposed vide the said show cause notice. The said proposal was confirmed vide the order-in-original No. 19/2010 dated 29.10.2010. Bering aggrieved the appellant is before this Tribunal. 2. We have heard learn....
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....structure. None is the case with respect to rails in the present case. It is further submitted that the adjudicating authority has wrongly relied upon the decision of the larger bench of this Tribunal in the case of Vandana Global Vs. Commissioner of Central Excise reported as 2010 (253) ELT 440 (Tribunal Larger Bench) as the said decision already stands set aside by the Hon'ble High Court, Chhattisgarh and the appeal thereof has also been dismissed. With these submissions learned Counsel has prayed for the order to be set aside and the appeal to be allowed. 4. While rebutting these arguments, it is submitted by learned DR that there is no infirmity in the finding of the order-under-challenge as that since the rails and pipes were not used in the factory of assessee. The appellant, therefore, is not entitled to avail the CENVAT Credit . It is submitted that, infact the manufacturing has till date not been started by the appellant in the impugned premises. Once there is no final product, the impugned rails meant for transport of raw-material and final product, have rightly been denied to be called as the goods used in or in relation to manufacture of the final products. Above all....
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....els, cement etc., have not been specifically listed under the definition of 'capital goods'. 3. That credit is availed on structural steel and cement which was not covered within the ambit of the definition of 'capital goods'. [para 65] 4. Reliance placed on the decision of Larger Bench in Vandana Global Ltd., 2010 (253) ELT 440 (Trib- LB) 5. The argument that the independent components should be construed as inputs for the setting up of plant is not accepted. That the input should have a direct nexus with the process of manufacture as held in Maruti Suzuki Ltd;, 2009 (240) ELT 641 (SC). The credit for these goods are taken as 'capital goods' and not as inputs is only an afterthought [para 67] 6. That explanation 2 to Rule 2 (k) inserted to Cenvat Credit Rules, 2004 is retrospective in nature and hence the credit is to be denied. d. Inputs service of trave agency service, consulting engineer service, insurance service, transport service, security services, topographical survey services, soil testing services etc. 1. That service being used in ongoing construction of factory and that factory is not excisable and exemption is available vide Notification No. 67/95-CE....
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....of clearance of such products from the factory (para 63 to 66]. Appeal No. E/2344/2011: In addition to goods/input/input service in two above appeals following are the goods on which credit has been denied in this appeal : (i) Butterfly valves and air release valves used in the pipeline from Mylavaram dam to factory premise. (ii) Also transformers, water storage tank. 6. The substantial questions which arises for our consideration in these appeals, therefore, are : (i) Whether the duty paid by the appellant on rails used in construction of railway-lines & sleepers, pipes, pumps, valves etc. are the capital goods/input and thus could be availed by the appellants as CENVAT Credit. (ii) Whether the input services used for the construction of the appellants' manufacturing units are the input services which could be availed for by the appellants as CENVAT Credit. 7. To answer these questions, it is foremost necessary to look for the definition of capital goods, input & input services as contained in the CENVAT Credit Rules, 2004. The relevant provisions it reads as under: Capital goods- Rule 2(a) of CCR, 2004 (A) the foll....
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.... and (F) any goods which have no relationship whatsoever with the manufacturer of a final product. Input service -Rule 2(l) of CCR, 2004 (i) used by a provider of [output service] for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacturer of final products and clearance of final products, upto the place of removal, 8. A perusal of the aforesaid provision makes it very clear that goods which are used in the manufacture of capital goods which are further used in the factory of the manufacture are inputs. Therefore, the input is not necessarily to be used in the manufacture of final product. By virtue of explanation goods used in the manufacture of capital goods which are further used in the factory of the manufacturer of capital goods also falls within the definition of input. In 2009, this explanation has been amended to the effect as recorded above. Also definition of capital goods is not confined to cl. of Rule 2(a) CCR, 2004 but extends to all other clauses therein. As per clause (iii) thereof it is clear that if anything is component, spare & accessories to such inp....
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....at it shall come into force from the date of its publication in the official gadget. Clearly, if, the intention would have been to simply clarify or to give it retrospective effect, it would have been brought into force from a date anterior to the date of publication of the notification. It becomes clear from this decision that the basis of the order-under-challenge cannot extend for the period prior 07.07.2009. The period in dispute except for in appeal No. 604 is the period 7 is the period prior 07.07.2009. Thus, it becomes clear that findings of adjudicating authority in both the said appeals is not sustainable. For the sake of convenience to this aspect, the relevant part of notification is as follows: 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 followi....