2015 (11) TMI 45 - AT - Central Excise

Single registration in central excise - two separate units at a distance of 221 km - Held that:- Merely because the exempted iron ore concentrate manufactured at a separate plant and transported through pipe line for exclusive use in the manufacture of iron oxide pellets, to another factory situated 221 kms away would not make the two factories as one and the same. In our opinion also, the transfer of raw materials i.e. iron ore concentrate in slurry form through pipe line from Barbil factory to Jajpur Pellet factory cannot be construed that the Barbil plant is a captive plant of the Jajpur factory and entitled to a single Registration.

CENVAT Credit - captive consumption - whether the appellant s Jajpur Unit engaged in the manufacture of Iron oxide pellets, a dutiable product, are eligible to avail CENVAT Credit on inputs, capital goods and input services used in or in relation to manufacture of iron ore concentrate at their Barbil Plant, which were ultimately be transferred to their manufacturing unit at Jajpur for manufacture of the said dutiable pellets falling under Chapter 26 of CETA, 1985 - Exemption under Notification No. 4/06-CE dated 1/03/2006 - Held that:- Out of iron ore fines(uneven sizes) iron ore concentrates in slurry form are manufactured and transported/cleared through pipelines to their pellet plant. The said iron ore concentrate became chargeable to duty w.e.f 01.03.2011. Therefore, it cannot be said that the inputs were directly used by bringing the same from the mines to the pellet plant at Jajpur. On the other hand, in the benefication plant the Iron Ore fines are converted into Iron ore concentrates in slurry form. In our opinion, therefore, the ratio laid down in Vikram Cement s case is not applicable to the facts of the present case.

Consequently, the Appellants are not eligible to avail credit at their Pellet plant at Jajpur on the duty paid on the inputs , Capital goods and input services which are used in or in relation to the manufacture of Iron Ore concentrates at the benefication plant at Barbil.

However, we find force in the contention of the ld. Advocate that in procuring the iron ore concentrate in slurry form through pipe line from their Barbil plant to Jajpur plant, the services used, fall within the scope of input services being specifically covered under the inclusive part of the definition of input service as prescribed at Rule 2(l) of Cenvat Credit Rules, 2004, hence, eligible to cenvat credit at their Jajpur Plant.

Extended period of limitation - CENVAT credit had been availed at Jajpur factory, on an interpretation of the relevant provisions of the CENVAT Credit Rules and principle of law laid down by the Hon ble Supreme Court in Vikram Cement s case & other cases and also the demand notice is issued for the normal period without invoking suppression, mis-statement etc., therefore, in these circumstances penal provision, in our view is not attracted.

Regarding levy of interest for availing the credit we find that a new plea has been raised by the Appellant, whereby it is claimed that they have availed the CENVAT credit at Jajpur plant in their books of accounts only on theoretical basis; actual production of iron ore concentrate(which become dutiable from 01.03.2011) at Barbil plant commenced from 06.06.2013. In our opinion these facts need to be scrutinized and thereafter the applicability of interest provision be accordingly decided in the light of the principles of law settled in this regard. - Appeal disposed of.