TaxTMI 
TaxTMI 
2023 (9) TMI 1086
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....ch were manufactured in the factory of the appellant by the Contractors M/S Lalita Engineering Contractor who had also raised invoices for conducting the said activity within the factory. The appellant also maintained the RG-1 register for details of the fabricated goods and the generation and clearance of the waste which arose during the making of such MS Drums. 1.2 The case of the department is that the steel goods used for fabrication of drums are neither capital goods nor components or accessories of any capital goods as defined in Rule 2(a) (A) of Cenvat Credit Rules, 2004. Accordingly, the Show cause notices dated 27.12.2011, 13.09.2013, 21.10.2013 and 02.08.2018 were issued proposing denial of cenvat credit and recovery of the same in terms of Section 11 A (5) of Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules, 2004 along with interest under Section 11AA of the Act read with Rule 14 of the Rules and penalty under Section 11AC read with Rule 15 of the Rules. The Show cause notices dated 27.12.2011, 13.09.2013 and 21.10.2013 were adjudicated by learned commissioner vide Order-In-Original dated 04.10.2013 and 15.10.2013. In case of Show cause notice dated....
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....judice to his above submission, he further submits that if at all the credit is not admissible under capital goods the goods in question are falling under the category of input also in terms of Explanation 2 to Rule 2(k) of Cenvat Credit Rules, 2004 on the ground that all these goods were admittedly used in the manufacture of capital goods namely processed drums/reels, MS Drums which were used in the factory of the appellant in or in relation to the manufacture of final product namely wires and cables. Therefore, the iron and steel items under dispute satisfied the definition of input also. For this reason also appellant is entitled for cenvat credit. In support, he placed reliance on following judgments:- * Metrochem Industries - 2013 (292) ELT 578 (Tri.) * Rajasthan Spinning and Weaving Mills Ltd - 2010 (255) ELT 481 (SC) * Hindustan Zinc Ltd - 2007 (214) ELT A115 (SC) * SLR Steels Ltd - 2012 (280) ELT 176 (kar.) * L.H Sugar Factories - 2010 (253) ELT 135 (Tri. Del) * Sanghi Industries - 2022 (5) TMI 475 * Kallakurichi Cooperative Sugar Mills - 2020 (3) TMI 834 * Mankapur Chini Mills - 2019 (367) ELT 889 * India Cements Ltd - 2015 (321) ELT 209 (Mad.) * Mangal....
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....d - 2006 (201) ELT 429 (T) * Patton Ltd - 2006 (206) ELT 496 (T) * Satguru Engineering & Consultants Pvt Ltd - 2006 (203) ELT 492 (T) * Indian Hume Pipes Co. Ltd - 2004 (163) ELT 273 (T) 2.5 He submits that as per the submission with regard to the limitation, the appellant cannot be imposed penalty and demand being not sustainable interest is also not payable. 3. Shri Anoop Kumar Mudvel, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. He further submits that admittedly the goods on which cenvat credit was taken falls under Chapter 72 & 73 which is not covered under the definition of capital goods. Therefore, the cenvat credit taken by the appellant treating the goods as capital goods is not admissible. 3.1 He further submits that the iron & steel material under dispute is not parts or accessories of the capital goods. For this reason also cenvat credit under capital goods is not available to the appellant. 4. We have carefully considered the submission made by both sides and perused the records. In the present case the issue to be decided is that whether the appellant are eligible for taking cenvat credit on the....
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....s per the fact of the present case in view of the chartered engineer certificate submitted by the appellant, the use of the goods is not under dispute that the same were used in the manufacture of processed drums/ packing drums/ bobbin. These drums are used in relation to manufacture of final product as per the nature of the final product which is wire and cables. The wires and cables for purpose of processing in the manufacture are shifted from one process machine to other process machine which is possible only after winding of wires and cables on the drums and also for the purpose of packing by winding of final product. On the basis of this use the goods i.e. iron and steel material are clearly used in or in relation the manufacture, directly or indirectly, whether contained or not in the final product. In view of the very broad definition of input, the iron and steel material ultimately used in or in relation to the manufacture clearly falls under the definition of input. Therefore, even if it is assumed that the goods in question do not fall under the definition of capital goods, but it clearly falls under the definition of input. 4.3 Our above view is supported by the followi....
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....hin the purview of Serial No. 5 of the Table below Rule 57Q. 10. Having examined the question in the light of the language employed in Rule 57Q and the case law on the point, we are of the opinion that the appeal is devoid of any merit. 11. In Jawahar Mills Ltd. (supra), heavily relied upon by the learned counsel for the assessee, the question which came up for consideration was whether the claim of modvat credit by some manufacturers in respect of certain items by treating them as capital goods in terms of Rule 57Q was in order. Some of the items under consideration were power cables, capacitors, control panels, cable distribution boards, air compressors, etc. The Court examined the question in the light of the definition of capital goods given in Explanation to Rule 57Q, which read as follows : "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....
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....853-HC- Chattisgarh-CX "This bunch of matters are before us by reason of an order delivered by three member Bench of Customs, Excise and Service Tax Appellate Tribunal; for short the 'Tribunal', which is challenged in Tax Case No. 59 of 2011. 2. By the order dated 17-6-2008 the Principal Bench of the Tribunal referred the following issues for consideration to the Larger Bench : "(a) Whether the term "capital goods" can include plant, structures, embedded to earth? (b) Whether the goods like angles, joists, beam, channels, bars, flats which go into fabrication of such structures can be treated as 'inputs' in relation to their final products as inputs for capital goods, or none of the above? (c) Whether the credit can be allowed in respect of goods like angles, joists, beam, channels, bars, flats which go into fabrication of such structures and plant?" 3. Through the impugned order dated 4-5-2010 [2010 (253) E.L.T. 440 (Tri. - LB)], the Principal Bench of the Tribunal presided by the President and the two Members answered the reference by holding as follows : "(a) The terms 'capital goods' has been defined in the CENVAT Credit Rules, which in turn have been framed under....
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....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 on particular thing or goods and/or input and as such, the amendment could operate only prospectively." 6. That view has been quoted with approval by the Madras High Court in M/s. Thiruarooran Sugars v. Customs, Excise and Service Tax Appellate Tribunal (CMA 3814/2014 and connections) decided on 10-7- 2017 [2017 (355) E.L.T. 373 (Mad.)] to conclude that the said amendment cannot be treated as clarificatory. M/s. Thiruarooran Sugars also considered the issue as to the effect and fundamental value of the evidentiary statement made by the Finance Minister dealing with an amendment in the budget speech. 7. Section 37 of the Central Excise Act, 1944; for short, 'the Act', is a rule making power. Section 37(2)(xvia) provide for the credit of duty paid or deemed to have been paid on the goods used in, or in relation to, the manufacture of excisable goods. Section 37(2A) of the Act - The power to make rules conferred by clause (xvi) of sub-....
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.... not been placed by the Appellant. 4. Ld. AR for the Revenue on the other hand submits that the claim of the Appellant is not supported by any evidence including Chartered Engineer's Certificate, therefore, the matter may be remanded to the adjudicating authority for verification of the said claim of the Appellant. 5. I find that the Principal Bench at Delhi in Singhal Enterprises Pvt. Ltd's (supra) in laying down the principle on the eligibility of credit on similar items observed as follows:- "13. Now we turn to the question, whether credit is admissible on various structural steel items, such as, MS Angles, Sections, Channels, TMT Bar, etc., which have been used by the appellants in the fabrication of support structures on which various capital goods are placed? The same stands denied by the lower authority. The learned DR has sought disallowance of the same by citing the decision of the Larger Bench in the case of Vandana Global Ltd. (supra) and other judgments. Further, he has brought to our notice and emphasized the amendment carried out in Explanation-II to Rule 2(a) which defines the term 'Input' w.e.f. 7-7-2009. It has further been pleaded that the Cenvat credit clai....
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....uctural items used in the fabrication of support structures would fall within the ambit of 'Capital Goods' as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat credit." 5. Also, I find merit in the contention of the Ld. AR for the Revenue that the Appellant should establish the said use by adducing evidences. In the result, the matter is remanded to the adjudicating authority to examine the claim of the appellant on the eligibility of credit on the aforesaid items and the Appellants are free to adduce evidence including the certificate from a Chartered Engineer on its use, and the adjudicating authority is directed to decide the issue in the light of the principle of law settled by this Tribunal in Singhal Enterprises Pvt. Ltd.'s case(supra). All issues are kept open. Appeal is allowed by way of remand." 4.4 In view of the above judgment the credit on the identical goods in the present case has been held to be admissible. 4.5 We further find that as per Explanation 2 of Rule 2 (k) other than the input mentioned at clause (i) and (ii) of Rule 2 (k) the input also includes goods used in the manufacture of capital goods which are further....
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....being used in the Renu sagar township, the remaining quantity is used in the appellant's factory for production of aluminium. Therefore, the Cenvat credit in respect of capital goods and inputs used in the captive power plant located at Renu sagar cannot be denied just because the power plant is located at some distance from the factory. 6.4We also find that the Apex Court in the case of State of U.P. v. Renu-sagar Power Company reported in (1988) 4 SCC 59 has held that Renusagar Power Plant had no separate and independent existence apart from and independent of Hindalco (the appellant) and therefore the Renu sagar Power Plant has to be treated as captive power plant of Hindalco. 7. However, since, admittedly, some quantity of electricity generated is used in the township and is not used in the factory of the appellant company for manufacture of excisable goods, to that extent, the input duty credit would not be admissible in view of judgment of the Apex Court in the case of CCE v. Solaris Chemtech Ltd. [2007 (214) E.L.T. 481 (S.C.)]. However, for determining the quantum of input duty credit, which would be inadmissible on this ground, the matter would have to be remanded to the ....
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.... wherein it was reiterated that in terms of Rule 2(k) of the Cenvat Credit Rules, 2004, while Cenvat credit is available in respect of parts of Boiler, the same is not admissible in respect of structural components used for laying of foundation or making of structures for support of capital goods/Boiler, therefore, the Tribunal has erred in not considering the issue in its correct prospective. Furthermore, the Tribunal has erred in not applying the decision of Bajaj Hindustan Ltd. (supra), wherein this Court has held that Cenvat credit is not admissible on the inputs which were not used for manufacture of capital goods. 26. Refuting the submissions of the Learned Counsel for the Revenue, the stand of the Learned Counsel for the respondent-assessee is that the Tribunal has rightly passed the order and there is no illegality in the impugned order inasmuch as there is no dispute on the use of steel items in their factory and during the relevant period, the capacity of the plant had been extended and the said goods have been used as structural support for capital goods. 27. In order to consider rival submissions, first of all we would like to refer Rule 2(k) of Cenvat Credit Rules,....
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....er of the final product; or (b) any goods including accessories, cleared along with the final product, the value of which is included in the value of the final product and goods used for providing free warranty for final products; or (c) all goods used for generation of electricity or steam (or pumping of water) for captive use; or (d) all goods used for providing any (output service); or (e) all capital goods which have a value up to ten thousand rupees per piece, but excludes - (A) light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol; (B) any goods used for- (a) construction or execution of works contract of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods, except for the provision of service portion in the execution of a works contract or construction service as listed under clause (b) of Section 66E of the Act; (C) capital goods, except when,- (i) used as parts or components in the manufacture of a final product; or (ii) the value of such capital goods is up to ten thousand rupees per piece; (D) motor vehicles; (E) any goods, such as food ite....
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....004 prior to the amendment of Explanation 2 to Rule 2(k) by notification dated 7-7-2009. The Madras High Court has held that irrespective or whether 'user test' is test applied, or the test that they are in the integral part of the capital goods is applied, all such items fell within the scope and ambit of both Rule 2(a)(A) and 2(k) and, therefore, Cenvat credit was to be allowed on such goods. 35. In view of above settled position of law, since items used by the respondent-assessee were used as structure to hold the capital goods, hence, it is wrong to say that respondents are not eligible to Cenvat credit. Therefore, in our considered opinion, the Tribunal has rightly allowed the appeal and the reasoning given by the Tribunal cannot be said to be not cogent or correct appreciation of evidence on record. 36. Insofar as the assertions of the Revenue that while passing the impugned order, the Tribunal has ignored to consider the judgment rendered in Bajaj Hindustan Ltd. (supra) is concerned, we find that the Bajaj Hindustan Ltd. (supra) was a case where the assessee had failed to demonstrate the usage of the material itself and the Court, therefore, found that there was no subst....
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....r as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production; (ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service. Explanation 1. - The light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever. Explanation 2. - Input includes goods used in the manufacture of capital goods which are further used in the factory of the manufacturer." 5. From the perusal of the above definition of 'capital goods', it makes the position clear that such goods, which fall under Chapters 82, 84, 85 and 90, answer to the definition of capital goods. Further, components, spares and accessories of the goods of above Chapters also qualify for the purpose of definition of capital goods. On reading of the above definition, it reveals that no Chapter of the Central Excise Tariff Act, 1985 (CETA) has been prescribed for the components, spares and accessories for consideration as capital....
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....said judgment are extracted herein below : 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 afore-noted 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 Additional Solicitor General, appearing for the Revenue, to the effect that the question whether an item falls within the purview of "capital goods" would depend upon the use it is put to. 13. Applying the "user test" on the facts in hand, we have no hesitation in holding that the steel plates and M.S. channels, used in the fabrication of chimney would fall within the ambit of "capital goods....
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.... in the manufacture of capital goods, which are installed for manufacture of the capital goods should also be considered for availment of Cenvat credit. In the case in hand, the cement and steel bars used to erect foundations for installing different machines in the power plant should also merit consideration as 'input' for the purpose of cenvat benefit. Analyzing and interpreting scope of the definitions of 'input' and 'capital goods', the Hon'ble Madras High Court in the case of M/s. Thiru Arooran Sugars & Ors. (Civil Misc. Appeal Nos. 3814/2011 and 2695 and 2696/2012) has held that steel and cement used for laying of foundation for erection of capital goods should be eligible for the cenvat benefit under the present set of rules. The relevant paragraph in the said order is extracted herein below :- "44. In the facts of this case, we have to conclude that MS structural, which support the plant and machinery, which are, in turn, used in the manufacture of sugar and molasses are an integral part of such plant and machinery. The assessee has clearly demonstrated that structural as well as foundations, which are erected by using steel and cement are integral part of the capital goo....
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....2 (T) "5.6 We do not find that there is any strong reason for holding that they had an intention to evade Central Excise duty especially when it is on record that they had manufactured the goods on job work basis and sent the same to the principal manufacturer. In this connection, we had gone through the agreement between the appellant and the two raw material suppliers. Nowhere in the agreement, it is stated that the job worker will be clearing the goods on payment of duty. In our view, there is no justification for extending the longer period, because the period of dispute is from 1-4-2001 to 31-3-2003. The officers visited the unit and carried out search operations on 26-3-2003. However, the show cause notice was issued only on 30-6-2005. There is an enormous delay. Of course, the longer period can be invoked, provided there is suppression of facts with an intention to evade duty. In this case, the appellants have submitted periodical declarations. They have been availing SSI exemption. The audit parties also have visited them several times. So in these circumstances, we cannot accept that they had suppressed the facts with an intention to evade duty. So the longer period is n....