TaxTMI 
TaxTMI 
2025 (7) TMI 926
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....Original No. 09/2014 dated 11.12.2014, confirming the entire demand of Rs.4,81,57,204/- invoking extended period and also appropriating an amount of Rs.6,33,676/- and interest of Rs.30,338/- paid during the investigation besides imposition of penalties under Section 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. 3. The Ld. Advocate Shri S Jaikumar appeared on behalf of the Appellant and argued issue wise as follows: - i. Availment of CENVAT Credit of duty paid on various items including M.S. Plates, Channels, stairs and ladders, etc., received as capital goods; ii. Availment of CENVAT credit of duty paid against commercial invoices; iii. Availment of CENVAT credit of Service Tax paid on the services of testing of air in and around factory premises; iv. Availment of CENVAT Credit of Service Tax paid in respect of reimbursement to seller of coal under debit notes and v. Reversal of CENVAT credit availed on inputs and input services which were used in the manufacture of non-excisable goods viz. electricity wheeled out. 4.1 With respect to the availment of CENVAT Credit of duty paid on va....
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....liance was placed on the following decisions: - a) Sarvesh Refractories (P) Ltd. [2007 (11) TMI 23-SC] b) Mohan Breweries & Distilleries Ltd. [2010 (8) TMI 281 MADRAS HIGH COURT] c) GKW Ltd. [2015 (1) TMI 374 CESTAT MUMBAI] 5. In respect of the CENVAT Credit availed on commercial invoices to the tune of Rs.73,841/-, the Ld. Counsel has conceded to the demand and during the hearing before the Tribunal submitted that they would not agitate the same. What is agreed to, needs no discussion. 6. In respect of availment of the CENVAT Credit of the service tax paid towards air testing services, he would submit that the Appellant had availed input service credit of Rs. 52,483/- on invoices issued by M/s. Envirocare India Pvt. Ltd. who had provided services of testing of air in and around factory premises. He has submitted that, it is the mandate of law to undertake sampling and analysis of hazardous waste and Pollution Control Equipment is considered as a Capital Good in terms of Rule 2(a)(A)(iii) of CENVAT Credit Rules, 2004 and hence, credit availed on the service of monitoring air pollution is very much eligible. Reliance in this regard was placed on the ....
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....tly used captively for manufacture of dutiable products and partly wheeled out to TNEB/private parties for sale consideration. 8.3 The credit attributable to inputs used in manufacture of electricity w.r.t 30MW power plant has been reversed. However, as alleged in the SCN and confirmed in OIO, the Appellant has not reversed credit availed to the tune of Rs.3,87,29,140/- on inputs used in 8MW power plant as the input being 'flue off gases' generated in the instant case is a by-product in the process of manufacture of sponge iron. The mere fact that these gases are used in generation of electricity cannot justify the department's interpretation that these are Cenvatable inputs used for manufacture of non-excisable goods i.e., electricity. It is pertinent to note that the above facts were admitted as detailed in para 04.01 of the SCN. 8.4 It was submitted that the flue gas emerges on its own volition without feeding any inputs specifically for this purpose. Therefore, the credit of specified duty shall not be denied on the ground that a part of inputs is contained in any waste, refuse or by-product, etc. In this regard reliance was placed on the Appellant's own c....
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....ess of manufacture of sponge iron. The mere fact that these gases are used in generation of electricity cannot justify the Department's interpretation that these are Cenvattable inputs used for manufacture of non-excisable goods i.e., electricity. 9. Shri M. Selvakumar, the Ld. Authorized Representative appeared for the Department and has reiterated the findings of the Ld. Adjudicating Authority. In respect of the availment of CENVAT Credit on the various items availed as capital goods, he would place reliance on the ratio of the decision of the Larger Bench in the case of Vandana Global Ltd. Vs. CCE, Raipur [2010 (253) ELT 440 (Tri. LB)]. With respect to the availment of CENVAT Credit on the service tax paid on the testing services of air, the Ld. AR would fairly admit the eligibility. Finally, with respect to the demand of reversal of CENVAT Credit availed on inputs and input services which were used in the manufacture of non-excisable by products namely steam and its subsequent generation of electricity, he would reiterate the findings of the Ld. Adjudicating Authority. 10. Heard both sides and carefully considered their submissions, appeal records and the case laws re....
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....is a part of the Boiler or a component to make structure for supporting the Boiler is a question of facts and needs to be examined on a case-to-case basis, depending on the nature and use of the said structural component as per the existing legal provisions and judicial pronouncements on the subject. 4. As clearly stated in para 3 of Boards' above circular dated 2.4.2012, it is once again reiterated that in terms of the 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 the structural components used for laying of foundation or making of structures for support of capital goods/ Boiler. The above clarification is in conformity with the views expressed in the judgments of the Hon'ble Supreme Court/ different benches of the CESTAT. 5. Trade, industry and field formations may be suitably informed. 6. Hindi version will follow Yours faithfully (Madan Mohan) Under Secretary (CX.1) _______ Circular No.964/07/2012-CX F. No. 84/1/2011-CX-1 Government of India Ministry of Finance D....
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....er only under Heading 8402 of the Tariff. It is further clarified that since these structural components are nothing but the parts and accessories of the Boiler, they would be covered by the definition of inputs under Rule 2(k)(iii) of the CENVAT Credit rules, 2004 (i.e. al goods for generation of electricity & steam). Further these structural components shall not be hit by the exclusion clause to the said definition of inputs, as these are not used for laying of foundation or making of structures for support of capital goods, but are essentially the part of said Boilers. 4. Trade, industry and field formations may be suitably informed. 5. Hindi version will follow. Yours faithfully, (Madan Mohan) Under Secretary (CX1) 12. Further, the Appellant has also placed reliance on the decisions of M/s. Sri Sai Sindhu Industries Ltd. [2016 (8) TMI 484 CESTAT HYDERABAD] and Steel Strips Wheels Ltd. [2022 (9) TMI 797 CESTAT CHENNAI]. In the case of Steel Strips Wheels Ltd., supra, the Single Member, considering the ratio of the High Court in the case of India Cements [2015 (3) TMI 661-MADRAS HIGH COURT], has held that the CENVAT Credit on suppor....
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.... boiler components and items like beams, channels etc. which are used as supporting structures to the boilers and bunkers without which the said boilers and bunkers cannot be erected or made to function. 7. It is crystal clear from the invoices that the supply of goods are parts of boilers. The circulars also have clarified that the items used for support structure of such boiler/capital goods are eligible for credit. There is no evidence adduced by the department to show that the boiler can function without the support structures." 13. The reliance placed on the larger bench decision of the Tribunal in case of Vandana Global Ltd. Vs. CCE, Raipur [2010 (253) ELT 440 (Tri. LB)] does not come to the rescue for the Department as the same has been reversed by the Hon'ble High Court of Chhattisgarh [2018 (16) GSTL 462 (Chatt.)]. The Appellants contention that there cannot be a reclassification at the receivers end also has force. 14. In the case of M/s. India Cements Ltd. Vs. Commissioner of Customs, Excise and Service Tax [2015 (3) TMI 661-MADRAS HIGH COURT], the Hon'ble Madras High Court has held as follows: - "8. Heard learned counsel appearing for the ass....
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....ant's own case as referred above. We have also noticed that the Hon'ble Supreme Court in the case of Rajasthan Spinning and Weaving Mills Ltd.(supra) as relied upon the Hon'ble High Court in the appellant's own case, allowed MODVAT credit on MS channels, steel plants etc. as capital goods used for erection of chimney for diesel generating set. The findings of the Commissioner that these are structures fixed to earth with concrete foundations and are immovable appears to be beyond the scope of the show-cause notice. So, the case of M/s.Triveni Engineering & Industries Ltd. (supra) as relid upon by the learned AR is not applicable in the present case." 11. Asfar as the reliance placed on the decision reported in 2011-TIOL-73-SC-CX (Saraswati Sugar Mills V. Comissioner of Central Excise, Delhi - III) in Civil Appeal No.5295 of 2003 dated 02.08.2011 by the learned Standing Counsel appearing for the Revenue is concerned, we find that this Court had earlier considered the case of the assessee in two similar cases of the previous assessment years in C.M.A.No.1301 of 2005 dated 31.12.2012, where a reference was made to an order passed earlier in respect of the very....
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....nvat Credit availed on Debit Notes & Testing Charges: - 17. The Appellant has availed input service credit based on the debit notes raised by M/s. Starcoal India Private Limited on them. These debit notes were raised for claiming reimbursement of Wharfage & Handling Charges paid by them at Tuticorin Port. This credit was sought to be denied as there was no Service Tax Registration Number in any of these documents issued by M/s. Starcoal India Private Limited. However, the Appellant has submitted the copies of debit notes raised by M/s. Starcoal India Private Limited and related invoices and a copy of one of the invoices is extracted below: - A perusal of the above debit note or service tax invoice clearly indicates that Service Tax Registration Number and all other details are incorporated as required. Details of service tax paid are also discernable. As such, denial of the credit is not justified and the same is to be allowed as there is substantive compliance which stands undisputed. 18. Further, the Appellant had also availed credit on the services provided by M/s. Envirocare India Pvt. Ltd. to the tune of Rs.52,483/-. These services are meant for testing of air in and ....
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....f Central Excise Rule, 2004 cannot be applied. In the instant case steam is generated in the course of manufacture and it cannot be said that the appellants have manufactured steam which is an exempt product. Hon'ble Gujarat High Court in the case of Sterling Gelatin - 2011 (270) 200 (Guj) held that a bye product emerging in the course of manufacture cannot be treated as a manufactured product for the purposes of Rule 6 of Cenvat credit Rules. Hon'ble Court held that: "7. At this juncture, reference may be made to certain statutory provisions. Rule 6 of the Cenvat Credit Rules, 2002 makes provision for "Obligation of manufacturer of dutiable and exempted goods". Sub-rule (1) thereof provides that CENVAT Credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods, except in the circumstances mentioned in sub-rule (2). Sub-rule (2) provides that where a manufacturer avails of Cenvat Credit in respect of any inputs and manufactures such final products which are chargeable to duty as well as exempted goods, then, the manufacturer shall maintain separate accounts for receipt, consumption and inventory of inputs meant for use in the ....
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.... 9. At this stage, it may be germane to refer to the decision of the Supreme Court in the case of Commissioner of Central Excise, Mumbai v. National Organic Chemical Industries Limited, (2008) 16 SCC 490 = 2008 (232) E.L.T. 193 (S.C.), wherein the question before the Supreme Court was as to whether emergence of methane and ethane during the course of manufacture of ethylene and propylene would be a ground for denial of benefit of exemption in respect of ethylene and propylene which was exempt from excise duty. It was contended on behalf of the respondent-assessee that there was no way by which the respondent could have manufactured ethylene and propylene for producing ethane and methane. The Court held that it was not as if by using a smaller quantity of raw materials or other goods involved in the process, the respondent could have averted the emergence of ethane and methane. In other words, in the technology utilized for the manufacture of ethylene and propylene, the emergence of ethane and methane was inevitable. Hence, while it was no doubt correct to say that ethylene and propylene had been used in or in relation to manufacture of ethane and methane, the identical quantity....
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....rt in the case of Hi-Tech Carbon (supra) wherein similar situation had come up for consideration. The Ld. A.R has objected the application of this judgment contending that the said decision pertains to the period when erstwhile Modvat Credit Rules were in force. However, we find that the issue under consideration being exactly identical and the Hon'ble High Court having relied upon the decisions in the case of UOI Vs Hindustan Zinc Ltd. and Rallis India Ltd. (supra), we are of the considered opinion that the judgement of Hon'ble Allahabad High Court would apply to the appeals before us. " 9. In view of the above, we find that nothing survives in the impugned order and the same cannot be sustained. The impugned order needs to be set aside. We do so and allow the appeal with consequential relief, if any, as per law. 20. The by-product steam is converted into electricity which is non-excisable. When the credit is to be allowed in case of by-product, the question of reversal shall not arise in respect of electricity generated using the said by-product. In the case of Hindustan Zinc Ltd. [2004 (178) ELT 255] it was held that mere fact of use of by-product for conversion to f....