TaxTMI 
TaxTMI 
2026 (3) TMI 100
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....ice tax registration and availing CENVAT credit under the provisions of CENVAT Credit Rules, 2004 on various 'inputs', 'capital goods' and 'input services' and was filing periodical returns under Rule 9 and 9A of the CENVAT Credit Rules, 2004. Alleging that the Appellant had availed ineligible CENVAT Credit for the period from June 2013 to March 2014, proceedings were initiated and thereafter a show cause notice (SCN) dated 01.07.2004 were issued. Further, another 3(three) show cause notices (SCNs) were issued for the period from April 2014 to June 2017. Thereafter the Adjudicating authority as per the common Order-in-Original dated 15.05.2019 denied the CENVAT credit and confirmed the demand / reversal along with interest and also imposed penalty under various provisions of Finance Act, 1994. Aggrieved by said order, present appeal is filed before the Tribunal. 4. The Learned Counsel for the Appellant during the hearing draws our attention to the definition of capital goods as per Rule 2(a)(A) of CENVAT Credit Rules, 2004, reproduced below:- 2. Definitions: In these rules, unless the context otherwise requires,- a) Capital Good....
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.... In this regard, Learned Counsel submits that for the purposes of manufacture of final product, the molten metal is required to be transported from the "blast furnace" to the "steel melting shop' which are both located within the factory premises of the Appellants. It is emphasized that, without the transportation of the molten metal from one place to another within the factory of the Appellants, the manufacturing of final products cannot take place. The transportation of molten metal is effectuated through "torpedo ladle cars' which are hauled by "diesel locomotives" which run on a specialized railway tracks laid down within the factory of the Appellants. The Learned Counsel also draws our attention to the process of transporting the molten metal as explained hereunder: (i) The 'torpedo ladle cars collect / receive molten metal from the blast furnace in a red-hot condition at an approximate temperature of about 1400°C; the torpedo ladle cars are specially designed to retain the heat of the molten metal poured therein till the same is transferred to the next process; the said torpedo ladle cars generally carry about 200 to 300 Metric tons of molten metal an....
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.... tubes pipes etc.,). The contention of the department is that they availed Cenvat credit by treating the same as inputs as it does not qualify to be inputs which are used in the manufacture of capital goods which are further used in the factory of manufacturer as enshrined in explanation 2 of Rule 2(k) of Cenvat Credit Rules, 2004. They have also placed reliance on the Vikram Cement-2005 (187) ELT 145 (S.C). 4.1 The contention of the respondent is that they have set up integrated steel plant having railway siding within the factory premises and laid down railway lines within the factory connecting one plant to another plant for movement of raw material, semi-finished and finished goods. The diesel locomotive as an accessory to the torpedo ladle car which increases the convenience of carrying molten metal from one place to another i.e. from blast furnace to conarc furnace and then to pig casting machine". 4.2 Respondents filed the Cross Objection challenging the finding of appellate authority that torpedo ladle car could have been manually handled is not factually correct. In fact the respondent need to have use some mechanical force i.e. Diesel Locomotive for hand....
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..... The appellant had correctly availed the Cenvat credit of the duty paid on diesel locomotive. 8. The appellant have also asserted that the use of diesel locomotive in carrying molten metal from blast furnace to conarc furnace and then to pig casting machine is part of the chain of manufacturing processes. There can be no doubt that this is so the case. So also bringing raw materials, like coal and iron ore, to the furnace and to carry empty wagon in the factory is also part of the manufacturing activity. When that is so, any goods used in relation to the manufacturing activity become an input. This finds support from the Tribunal decision in Banco Products (India) Ltd. (supra) and the Supreme Court decisions in Rajasthan State Chemical Works (supra) and Telco Ltd. (supra). In that view of the matter, diesel locomotive can as well be an input so as to come within its definition in the Cenvat Credit Rules, 2004." 5.2 From the above we find that Ld. Commissioner (Appeals) has given clear and cogent findings. However, so far as his observation, "The torpedo ladle car containing molten iron could have been manually handled from one place to another.--- But its effecti....
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.... He further submitted that in the show cause notice, there is no allegation with regard to fraud, collusion or misdeclaration with intent to evade payment of duty. He further submitted that the appellate authority has mainly relied upon the decision in the case of Madras Cement and Hindustan Zinc wherein it is not specifically held that the credit of locomotives is not eligible as an accessory of the capital goods. In support of his submission, he relied upon the following decisions:- i. Aditya Cement Vs. CCE, Jaipur-II [2017(346) ELT 300 (Tri. Del.)] ii. CCE,C & ST, BBSR-I Vs. Bhusan Steel Ltd. [2012(286) ELT 745 (Tri. Kolkata)] iii. Tata Steel Ltd. Vs. CCE, Jamshedpur [2016(335) ELT 303 (Tri. Kolkata)] iv. Aditya Cement Vs. UOI (2008(221) ELT 362 (Raj.)) v. Jayaswal Neco Ltd. Vs. CCE, Raipur (2015(319) ELT 247 (SC)) vi. CCE, Indore Vs. Vikram Cement [2000(123) ELT 628 (Tri.)) ............................. ............................ ............................. 8. In the light of the discussion made above and by following the ratio of the Bhusan Steels Ltd. and Aditya Cement cited supra, I....
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.... 5.1 Moreover, 'input', in terms of Rule 2(k) of Cenvat Credit Rules, 2004 means "all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or 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. 5.2 From the above definition, it is very clear that a manufacturer is entitled to Cenvat credit in respect of inputs or capital goods received in the factory of manufacture of final products used directly or indirectly in relation to manufacture of final products or any other purpose within the factory of production. The definition is very wide to cover even maintenance and repair. In view of this and also the various case-laws relied on by the learned Commissioner (Appeals), we do not find any merit....
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....is not specifically covered in the definition of capital goods. We find that a locomotive engine is used in hauling a coach / wagon / car which in the instant case is a 'torpedo ladle car'. Further to facilitate movement of goods within the factory the rails are laid in such a manner that they also facilitate bringing in the raw material and taking out of the finished product, therefore the impugned locomotive may appear to be a locomotive used in the transport of passengers and goods. However the impugned locomotive would be specifically designed for the purpose of hauling the 'torpedo ladle car'. Further these locomotives are not designed for high speeds required for main line operations. Revenue has not adduced any of the specific features of impugned locomotive which would enable them to be used as a normal locomotive (main line Locos) used for the purpose of hauling the goods and passengers in the normal course of transportation of goods and passengers. In the absence of any such specific mention about the specifications of the impugned locomotive it is to be considered that it is a special purpose locomotive used for hauling the 'torpedo ladle car. Further....