2024 (11) TMI 3

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....of Cenvat Credit Rules, 2004, show-cause notice was issued to them on 23.09.2011 for recovery of the inadmissible credit of Rs. 1,81,28,042/- along with interest and proposal for penalty on the company and the other two appellants. On adjudication, the demand was confirmed with interest and penalty; also personal penalty was imposed on the Managing Director and Central Excise In-charge of the appellant. Hence, the present appeals. 3.1. The learned advocate for the appellant has submitted that in the impugned order, cenvat credit on various iron and steel items like ACSR conductors, Aluminium sheets, wires, coils, welding electrodes, copper bars / rods, MS rods / sheets/bards, channels, flats, joists etc. used in fabrication of capital goods or structural support for capital goods have been denied and penalty imposed on the appellants. The cenvat credit was denied on iron and steel items as mentioned in the notice alleging that since the items in question falling under Chapter 72, 73, 74, 76 and 83 of the Central Excise Tariff Act, 1985 are not covered under the definition of capital goods as defined under Rule 2(a) of the CCR, 2004. The said notice was issued solely on the basis....

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....nnels, flats, joists etc. used in the fabrication of capital goods or structural support for capital goods such as kiln, boilers, cooling towers, water treatment plant, Electro Static Precipitator (ESP) plant, power transmission line inside the factory, electrical connection and cable trays for holding cables, electrical earthing inside the factory, electrical work for the power plant, welding during the fabrication, erection and maintenance of various structures and machineries within the factory of production; hence rightly admissible to credit. In support, he has referred to the following decisions:- • India Cements Ltd. v. CESTAT., Chennai - 2015 (321) ELT 209 (Mad.) • CCE vs. India Cements Ltd. - 2014 (305) ELT 558 (Mad.) • CCE & ST vs. India Cements Ltd. 2014 (310) ELT 636 (Mad.) • Manglam Cement Ltd. vs. CCE., Jaipur 2018 (360) E.L.T. 737 (Tri. - LB) • Suguna Metals Pvt. Ltd. vs. CC., CE & ST., Hyderabad-I 2016 (339) E.L.Τ. 119 (Tri. - Hyd.) • CCE., Raipur vs. Jindal Steels 7 power Ltd. 2015 (330) ELT 708 (Tri.-Del.) • Thiru Arooran Sugars vs. CESTAT, Chennai 2017 (355) ELT 373 (Ma....

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....various High Courts and Tribunal. In support, he has referred to the following judgments:- • CCE., Salem vs. Madras Aluminium Co. Ltd. [2017 (349) ELT 133 (Mad.)] • KM Sugar Mills Ltd. vs. CCE & ST., Allahabad [2017 (350) ELT 273 (Tri.-Del.)] • Musaddilal Projects Ltd. vs. CCE., Cus. & ST., Hyderabad [2017 (4) GSTL 401 (Tri.-Hyd.)] 3.6. Learned advocate has further submitted that the total demand for the normal period of limitation from 09/2010 to 04/2011 on angles, channels, bars, beams, sheets etc. is around Rs.1,16,670/- and the appellant has already paid Rs.89,135/- on 05.04.2011, which has been appropriated in the impugned order. Further he has submitted that the appellants were under the bona fide impression that the impugned items were eligible for credit as capital goods; hence there is no suppression of facts with intent to evade payment of duty; accordingly, no penalty is imposable on any of the appellants. 4. Learned AR for the Revenue has reiterated the findings of the learned Commissioner. Referring to the list of items and its utility, he has submitted that credit attributable to bars, rods, angles, channels etc. post-amend....

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....2004 as per Rule 2 of the CENVAT (Amendment) Rules, 2009 retrospective in nature considering is it clarificatory to be applied to all matters which arise before 7-7-2009, the date of commencement of the CENVAT (Amendment) Rules, 2009 : hereinafter referred to as 'Amendment Rules'. 5. The impugned order of the Tribunal had come up for consideration before different High Courts either cited as precedent or as relied upon by the Tribunal in different other matters. The Gujarat High Court in Mundra Ports & Special Economic Zone Ltd. - 2015 (39) S.T.R. 726 (Guj.) referred to the contents of the amendment, to the extent it is relevant for the purpose of this case and held as follows : "We do not find that amendment made in the Cenvat 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 ....

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....rt, while noticing the view taken in Rajasthan Spinning and Weaving Mills Limited said that as long as it could be shown that the item in issue was an integral part of the machinery, i.e., capital goods, it would fall in the definition of 'component' and thus, by logical extension, come within the ambit of 'capital goods'. 43.1 To be noted, Hon'ble Mr. Justice D.K. Jain, (as he then was), was party to both the judgments rendered by the Supreme Court i.e., Rajasthan Spinning and Weaving Mills Limited as well as Saraswathi Sugar Mills Limited case. 43.2 Therefore, quite clearly, the two judgments referred to above cannot be read in the manner, as the Revenue is seeking to read them, that is, at cross purposes. In our opinion, the ratio of the two judgments, is that, as long as it is shown that the "component" and/or "accessory" is an integral part of the capital goods, (which, in turn, fall within the scope and ambit of the expression 'capital goods', referred to in Rule 2(a)(A)(i) of the 2004 Rules,) they would also qualify as capital goods. 44. In the facts of this case, we have to conclude that MS structurals, which support the plant and machinery, which....

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.... further use in the factory of the manufacturer. On a conjoined reading of the definition of input and Explanation 2 appended thereto, it makes the position clear that inputs are not only goods, which are used in the manufacture of final products, but also those which are 'used in or in relation to' the manufacture of the final product. The relationship between those goods and the final product could be either direct or indirect and may include or may not include their presence in the final products. Goods used 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 eligi....