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2025 (9) TMI 478
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....il 2012 to February 2015, Corrigendum/Addendum to Show Cause Notice was issued 06.03.2016 revising the demand to Rs. 3,03,23,553/-. The appellant submitted their detailed reply specifying the places wherein these goods were used in their manufacturing activity and towards fabrication of capital goods within their factory premises. This was duly supported by the Chartered Engineer's Certificate certifying the usage of these items by the appellant. However, after due process, the Adjudicating authority confirmed the demand along with interest and penalty. He also imposed penalty on the Director of the appellant company. Being aggrieved, they are before the Tribunal. 2. The Ld Advocate appearing on behalf of the appellant makes the following submissions : 2.1 The factory of the appellant is an integrated steel plant, consisting of Submerged Arc Furnace, Induction Furnace/SMS Unit and Kiln Furnace engaged in the manufacture of Ferro Alloys Products, M. S Ingot/Billet and Sponge Iron, respectively, all falling under Chapter 72 of the First Schedule to the Central Excise Tariff Act, 1944. 2.2 To keep the plant in running condition, a series of machineries & accessories/ componen....
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....ks 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, are not inputs. 2.5 The scope of the term "input", in this substituted definition, is far wider than the definition that existed prior to 01.03.2011. Thus all goods used in the factory by the manufacturer of the final product are "inputs". But the use of the goods should have nexus with the manufacture of goods. The Tribunal in Prism Cement Ltd. vs. Commissioner of Central Excise and Service Tax, Jabalpur [2016 (338) E.L.T. 593 (Tri. - Del.)] has held that - "2. Ms. Sukriti Das, ld. Counsel appearing for the appellant submits that the disputed goods namely, H.R. Alloy steel plates (hardox-400) are used in the factory for repair and maintenance of capital goods falling under Chapter 84 of the Central Excise Tariff Act, 1985. She further submits that the Chartered Engineer's certificate showing the area of use of the disputed goods in the factory premises was produced before the authorities below, which have also been discussed in the respective orders, but the credit has been denied on the ground that the disputed goods are n....
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....ng System falling under Tariff heading 8474 31 20; After Burning Chamber falling under Tariff heading 8419 50 90; and Day Bin (RMHS) falling under Tariff heading 8428 90. These capital goods being parts were thereafter affixed in DRI-II Plant using bolts and nuts and if need be, can be removed without dismantling these goods. Shri Atanu Kumar Mukerjee, Chartered Engineer, visited the factory on 26.08.2011 and 27.08.2011 and has certified the consumption of 828.989 MT of Steel in the manufacture of Reactor System (Parts of Kiln) (196.555 MT of Tor Steel, 216.273 MT of HR Plates, 91.81 MT of MS Beams, 319.221 of Angles & Channels, 5.03 MT of Flats); 712.911 MT of Steel in the manufacture of Reactor Cooling System(151.196 MT of Tor Steel, 312.25 of Joist, 193.948 MT of HR Plates, 55.517 MT of Angles & Channels); 871.745 MT of Steel in the manufacture of After Burning Chamber(574.545 MT of Tor Steel, 193.106 MT of HR Plates, 104.094 MT of Angles & Channels); 1279.842 MT of Steel in the manufacture of Day Bin (RMHS) (589.664 MT of Tor Steel, 393.306 MT of HR Plates, 181.74 MT of MS Beams, 215.128 MT of Angles & Channels). The total consumption of steel was 3693.487 MT which is the same ....
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....pipes'. This part of the demand relating to availment of credit on H.R. Coils/H.R. Plats/Chequered Coil in 'farma' and that on 'lancing pipes' and their uses has been dealt extensively in Paras 12 and 13 below. As would be seen, no demand arises in these two cases as these are inputs in terms of the definition of 'input' under Rule 2(k) ibid. The balance entries in Annexure B are entry no. 44 relating to the availment of credit on Wire Mesh and entry nos. 47 and 48 relating to the availment of credit on 21 pieces each of Crane Rail CR-100 (as may be seen from Input Credit Register for November 2012).Wire Mesh is used on over furnace burner/oven burner either in the plant or in the laboratory. Both these activities are related to the manufacture of goods. As regards Crane Rail CR-100, it is the base platform of EOT crane. EOT crane runs on crane rail. It is issued directly to the concern plant as per user indent due to its length in size. Crane rails are still in use in different plants of unit. This is a verifiable fact. The use of Crane Rail CR-100 is in relation to the manufacture of finished products, hence these are inputs.As seen from above, all the items referred in Annexure ....
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....ems add up to 838.220 MT. These steel items weighing 838.220 MT have used by the appellant in the factory for the manufacture of capital goods which were parts of the DRI-II plant, namely,- 1) ESP/WHRB (CETH 84213920) using 55.250 MT of steel; 2) AFTER BURNING CHAMBER (CETH 84195090) using 89.990 MT of steel; 3) CHAR STORAGE HOPPER FOR LUMPS (CETH 84289090) using 31.200 MT of steel; 4) CONVEYOR SYSTEM-GANTRY (CETH 84282019) using 249.495 MT of steel; 5) DAY BIN (RMHS) (CETH 84289090) using 169.455 MT of steel; 6) PRODUCT STORAGE HOPPER FOR LUMPS/FINES (CETH 84289090) using 118.850 MT of steel; 7) REACTOR FEEDING SYSTEM(CETH 84213920) using 52.300 MT of steel; 8) REACTOR SYSTEM (CETH 84213920) using 54.600 MT of steel; and 9) SURGE BIN HOPPER (CETH 84289090) using 26.080 MT of steel. 2.15 Shri Ajay Kumar Bazaz, Chartered Engineer, visited the factory on 03.12.2013 and 04.12.2013 and on inspection certified the consumption of 838.220 MT of Steel in the manufacture of 1) ESP/WHRB; 2) After Burning Chamber; 3) Char Storage Hopper For Lumps; 4) Conveyor System-Gantry; 5) Day Bin (RMHS); 6) Product Storag....
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....in the steel. While so the lancing pipe gets wholly consumed in the process. The pipe so consumed form part of the molten metal which is being taken out of the furnace. Since this pipe gets so consumed in the process, we hold that it is entitled to Modvat credit. This view is supported by the Larger Bench decision of this Tribunal in Union Carbide India Ltd. v. C. C. E., Calcutta-I reported in 1996 (86) E.L.T. 613 (T)." 2.19 The appellant had taken Cenvat Credit on Lancing Pipes/Rods and SS Rounds and had utilised these goods in the manufacture of finished products. Without the usage of 'lancing pipes/rods and SS rounds' manufacturing activity cannot take place, hence these 'lancing pipes/rods and SS rounds' are inputs as defined. Annexure B, D and F(revised) to the show cause specifically mention Lancing Pipes/Rods and SS Rounds by name of which cenvat Credit was availed. In spite of the fact that specific submissions were made in the reply to the show cause notice and the details of the credit entries of Lancing Pipes/Rods and SS Rounds were available in Annexures B, D and F (revised) to the show cause notice, yet the adjudicating authority overlooked these facts and has given....
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.... items mentioned against entry nos. 15-53 of Annexure F (revised) and has used these items, comprising 432.980 MT of steel (two charts are enclosed showing details of items comprising 266.990 MT and 165.990 MT, totalling 432.980 MT and collectively marked as Annexure XVI), to manufacture the following capital goods, namely - 1) CFBC-ESP (CETH 84213920) using 63.760 MT of steel; 2) COAL HANDLING PLANT (CETH 84282019) using 54.110 MT of steel; 3) STEAMLINE HACKS (CETH 8419590) using 31.200 MT of steel; 4) DM TANK (CETH 84195090) using 67.670 MT of steel; 5) TG PRODUCTION SYSTEM (CETH 85021360) using 48.760 MT of steel; 6) ANNEALING AND PICKLING LINE (CETH 85149000) using 115.910 MT of steel. Shri Ajay Kumar Bazaz, Chartered Engineer, visited the factory on 11.08.2014 and 12.08.2014 and on inspection has certified the consumption of 432.980 MT of Steel in the manufacture of above six capital goods. A copy of the Certificate dated 15.08.2014 is enclosed and marked as Annexure XVII. The Certificate also gives details of individual quantities of Beam, Angle, Channel, Joist, Chq. Plate, Plate/Coil/Bar/Sheet used in the manufac....
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....ouse, Stock House, Burning Chamber, Kiln Cooler, Transform House, Screening system, Agitator Tank, CFBC-ESP, Steamline Rack, DM Tank, TG Protection System, Annealing and Pickling Line, After Burning Chamber, Char Storage Hopper for Lumps, Gantry, Day Bin, Product Storage Hopper for Lumps/Fines, Reactor Feeding, Reactor System, Surge Bin Hopper, etc. All these capital goods were manufactured using M.S. Plates, M.S. Channels, Plates, Beams, Joists, Steel Tubes, H.R. Sheets/Strips, etc. on which Cenvat Credit was availed. The appellant informed the Department about this vide their letter Ref: SSL/Unit III/Ex/15-16/105, dated 07.09.2015 (Annexure XXII) about the usage of welding electrodes and LPG but yet consequent upon this, the Corrigendum / Addendum dated 06.03.2016 to the notice was issued. 2.25 None of the above referred capital goods can be in-house manufactured without welding for which welding electrodes and LPG are essentially required for welding. Thus the use of welding electrodes and LPG are essential "inputs" for the manufacture of capital goods. Since welding electrodes and LPG are not principal inputs hence these items do not figure in E.R.-6 returns. Some quantities....
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....al goods, are eligible inputs under Rule 2(k) ibid. 2.30 The Kolkata Bench of the Tribunal in the case of the present appellant has recently held that TMT Bars, MS Beams, Plates, Angles, Channels, Joists, Coils, Sheets, etc. used in the manufacture of capital goods, namely, Reactor System, Reactor Cooling System, After Burning Chamber and Day Bins (RMHS) are eligible inputs under the Cenvat Credit Rules, 2004. These are the same very goods covered under Annexures A, D and F to the show cause notice. A copy of the CESTAT Order No. F/05959/2017, dated 31.05.2017 is enclosed as Annexure XXIV. 2.31 DEMAND BARRED BY LIMITATION The show cause notice (Annexure I), dated 22.04.2015 was received by the appellant on 06.05.2015 and the Corrigendum / Addendum dated 06.03.2016 (Annexure II) was received by the appellant on 28.03.2016. Since the Corrigendum / Addendum has made substantial changes as well as enhanced the demand, thus the date of receipt of Corrigendum / Addendum has to be reckoned as the date of receipt of the show cause notice. The period of the show cause notice is 01.04.2012 to 28.02.2015. Thus the demand under the notice is beyond the normal period of limitation. 3. ....
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....nclusive. So long as the goods are used by the in manufacturer within the factory, those goods would qualify for Cenvat credit as 'inputs' 9. In the present case, all the goods in question under various Annexures to the SCN are no doubt, not direct inputs for manufacture of the finished goods, but are required to be used for fabrication of capital goods, which in turn are being used for carrying out the manufacturing activity. From the above definitions prior and post 1.4.2011, it can be seen that in both the cases, the inputs used for fabrication or usage in respect of any capital goods, would also qualify for cenvat credit as 'inputs'. As a matter of fact after 1.4.2011, the situation is much more liberal. As long as the assessee is able to satisfy the condition that the goods in question has been used 'in the factory' of the 'final product', the cenvat credit cannot be denied. This would also include the goods which are used towards maintenance and repairs, since the usage is within the factory premises. In the present case, it is not the Revenue's case that the goods in question were not received by the appellant in their factory premises, or were not accounted for properly.....
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....the credit has been taken during the period 1.4.2012 to 28.02.2015, i.e. post amendment with effect from 1.4.2011,for the goods used within the factory premises, we hold that the goods in question would qualify for cenvat credit as 'inputs'. The confirmed demand under the impugned Order gets set aside on this ground itself. 11. Since, the appellant has brought in further evidence in support of their case, we are also exploring their applicability in the coming paragraphs. 12. The Confirmed demand and the appellant's point by point submission is broadly on the following grounds : a) Confirmed Demand : Rs.1,07,07,000 : On3693.487 MT of Tor Steel, Joist, Plates, MS Channels, Flats, Beams and Angles: The appellant has submitted the full list of capital goods manufactured by them for usage the of the same for manufacture of their finished goods. The usage has also been certified by the Chartered Engineer. b) Confirmed demand of Rs.27,22,871/- relating to FY 2012-13 relate to availment of credit on H.R. Coils/H.R. Plats/Chequered Coil which were used in the making of 'farma' : It is clarified by the appellant that Farma forms part of Inner Shell of the Furnac....
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....low : 16. The Madras High Court in India Cements vs. CESTAT Chennai [2015 (321) E.L.T. 209 (Mad.)] set aside the decision of the Tribunal which had denied Cenvat credit on MS Rod Sheets, M.S. Channel, M.S. Plates, Flats etc. used in the fabrication of Fly Ash Hooper, Fly Ash Bin, Fly Ash Handling System & Kiln Brick Laying Work to hold refractories. 17. The Tribunal in Commissioner of Central Excise, Raipur vs. HI-Tech Power & Steel Ltd. [2015 (315) E.L.T. 428 (Tri. - Del.)] has held that M.S. Angles, Channels, Beams, Joists, M.S. Plates, Steel Tubes and H.R. Strips, etc. used for fabrication of capital goods, namely, Coal Ground Hopper, Iron Ore Ground Hopper, Coal Crusher House, Conveyor System, Stock House, After Burning Chamber, Kiln Coller Transformer House etc. are eligible inputs under Rule 2(k) ibid. 18. The Kolkata Bench, in the case of Surya Alloy Industries Ltd Vs CCGST Durgapur vide Final Order No.76932/2025 dated 11.07.2025, has held as under ; 8. We find that the issue as to whether angles, channels, joists, beams etc. used in the manufacture of the fabrication of machinery was under litigation for quite some time in view of the larger institution of....
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....ria, Dist.Burdwan, relevant to the assessment of the weight of steel used for setting up the various facilities of an integrated steel unit at the above referred address. The undersigned visited the said factory premises of Super Smelters ltd , situated at the above referred addres and having carried out a detailed inspection of said unit on 26.8.2011 & 27.08.2011, has determined that the following steel sections were used for the construction of various facilities of said unit so erected: C Particulars Tariff Heading MS Tor Steel(in MT) [in MT) (in MT) HR Plate/DMS Bea (in MT) Angle & Channel Flat (in MT) |Steel[in MT) Total 1 Reactors System(Parts 84743120 196.555 216.373 91.81 319.221 5.03 828.989 2 Reactor Cooling System . 84743120 151.196 312.25 193.948 SS.517 712.911 J After Burning Chamber 84195090 574.545 O 193.10€ 104.094 871.745 4 Day Bin(RMH(S) 842890 589.664 O 293.306 181.74 215.128 1279.542 Flat (in MT) Angle & Channel Reactors System(Parts 1 Reactor Cooling System . 2 After Burning Chamber J 3693.487 Total Steel(in Mt) Total Weight of steel materials used- It is to be noted....
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.... Surge Bin hopper (84282090) 26.080 26.080 Total weight of steel materials used Total Steel (in mt) 838.220 mt It is to be noted that the quantities of the steel sections used have been based on the bill of materials of various drawings pertaining to the above mentioned facilities, facts and figures as given in the relevant project report and invoices related to the procurement of said sections, as shown to the undersigned during the inspection. This Certificate is hereby issued 'without prejudice', to any of the parties interested ogry bkaspingid case. For SUPER SMELTERS LTD. AJA Ä°ÅŸinfor Menberstip No MO47021-4 CERTIFIED TO BE TRUE COPY ICHARCOREROUES Authorised Signatory 154 F Document 3 ANNEXURE - XVII 3 Ajay Kumar Bazaz B.Sc. Engineering (Elect.) / FIE CHARTERED ENGINEER Off./Resi .: A-57, Megh Mallar Sarani Bidhannagar, Durgapur-713212 Tele (0343) 2531178 Mobile 9233302099 / 9434007821 Dt.15.08.14 Certificate of Iron and Steel used for the fabrication of plant and machineries part of CPP & ROLLING units of M/s Super Smelters Ltd(U-III), Ikra, Jamuria Industrial Area, Dist.Burdwan, West Bengal under ....