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TMI ID= 326378
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2016 (4) TMI 492 - CESTAT KOLKATA

Commissioner of Central Excise & Service Tax, Bolpur Versus M/s. Vision Sponge Iron Pvt. Ltd.

Admissibility of Cenvat credit - Rule 2(a)(A) of Cenvat Credit Rules 2004 - Inputs like TOT/TMT Rods, Cement used in the manufacture of water tank to purify water for use in their Captive Power Plan - Revenue contended that the said storage tank is fully embedded to the ground and not remain goods - Held that:- by relying on the decision of Karnataka High Court in the case of Commissioner of Central Excise, Bangalore-II vs. SLR Steels Ltd. [2012 (9) TMI 169 - KARNATAKA HIGH COURT] as considered by the First Appellate Authority also which is squarely applicable to the facts and circumstances of the present appeal, the appellant is admissible for Cenvat credit. - Decided against the revenue

No.- Appeal No. E/75160/2014

Order No.- Order No. FO/A/75268/2016

Dated.- April 11, 2016

Citations:

  1. COMMISSIONER OF CENTRAL EXCISE, BANGALORE-II Versus SLR STEELS LTD. - 2012 (9) TMI 169 - KARNATAKA HIGH COURT

Shri H. K. Thakur, Member (Technical)

For the Petitioner : Sri S. S. Chatterjee, Supt. (AR)

For the Respondent : Adjournment request

ORDER

Per Sri H. K. Thakur

1. This Appeal has been filed by the Revenue against Order-in-Appeal No.102/BOL/2013 dated 06.11.2013 passed by the Commissioner of Central Excise (Appeals-III), Kolkata as First Appellate Authority.

2. None appeared on behalf of the Respondent and an adjournment request was received.

3. Sri S.S.Chatterjee, Supt.(AR) appearing on behalf of the Revenue submitted that the Appellant has used inputs like TOT/TMT Rods, Cement in the manufacture of water tank to purify water for use in their Captive Power Plan. It is the case of the Revenue that the said storage tank is fully embedded to the ground and not remain goods and accordingly no credit is admissible to the Respondent, as per Rule 2(a) (A) of Cenvat Credit Rules 2004 to the Respondent. Ld. A.R made the bench go through paragraph Nos.9 and 10 of the Order-in-Appeal dated 06.11.2013 to argue that the interpretations given by the First Appellate Authority are not proper.

4. Heard Ld. A.R and perused the case records. It is observed that the First Appellate Authority while allowing the Appeal of the Respondent relied on the case law of Commissioner of Central Excise, Bangalore-II vs. SLR Steels Ltd.[2012(280) E.L.T. 176(Kar.)]. While dismissing the Revenue’s Appeal, Karnataka High Court made the following observations in the case relied upon by the First Appellate Authority;

“6. In order to answer this question, it is necessary to look into the definition of capital goods as contained in the Cenvat Credit Rules, 2004 which reads as under :

Rule 2(a). Capital goods means :

(A) the following goods, namely : (i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, (Heading 6805, grinding wheels and the like, and parts thereof falling under Heading 6804) of the First Schedule to the Excise Tariff Act;

(ii) Pollution control equipment

(iii) components, spares and accessories of the goods specified at (i) and (ii);

(iv) moulds and dies, jigs and fixtures;

(v) refractories and refractory materials;

(vi) tubes and pipes and fittings thereof; and

(vii) storage tank, used -

(1) In the factory of the manufacturer of the final products, but does not include any equipment of appliance used in an office; or

(2) For providing output service.

7. A perusal of the aforesaid provision makes it very clear though storage tanks may be immovable property and the pollution control equipment are included within the definition of capital goods , input as defined in Rule 2(k) makes it clear that input includes in goods used in the manufacture of capital goods which are further used in the factory of the manufacturer. Therefore, the input is not necessarily to be used in the manufacture of final product. By virtue of explanation 2 - goods used in the manufacturer of capital goods which are further used in the factory of the manufacture also falls within the definition of input. In 2009, this explanation has been amended to the following effect :

“ but shall not include cement, angles, channels Centrally Twister Deform bar (C.T.D.) or Thermo Mechanically Treated bar (TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods.”

8. Therefore, the notification of the Legislature is very clear that it is only the inputs used in the manufacture or construction of capital goods which is construed as input and cenvat credit is available on the duty paid in purchase of such inputs. If the cement, angles, channels, Centrally Twister Deform bar (C.T.D.) or Thermo Mechanically Treated bar (T.M.T.) and other items are used in the construction of factory shed, building or laying of foundation, the duty paid on such items the assessee would not be entitled to cenvat credit. Similarly, though the assessee is entitled to cenvat credit of cement and steel used in the manufacture of capital goods viz., storage tank, if any structure for support of capital goods is constructed and steel and cement is used for such support, the assessee is not entitled to the benefit of cenvat credit on the duty paid on such cement and steel. Therefore, there is no ambiguity in any of these provisions. When once a storage tank and pollution control equipment constitutes capital goods and any raw material purchased for construction of those goods, the duty paid could be utilized as a cenvat credit by the assessee notwithstanding the fact that the storage tank is an immovable property. Therefore, the appellate authority committed a serious error firstly in holding that the storage tank is an immovable property and secondly, on the ground that it cannot be bought and sold in the market, the criteria which is totally unwarranted under the circumstances. Therefore, the Tribunal was justified in setting-aside the said order and holding that the assessee is entitled to the benefit.”

5. The case law considered by the First Appellate Authority is squarely applicable to the facts and circumstances of the present appeal and accordingly Appeal filed by the Revenue is required to be dismissed.

6. Appeal is dismissed by upholding Order-in-Appeal dated 06.11.2013 passed by the First Appellate Authority.

( Operative Portion of the order was pronounced in the open court. )

 
 
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