TMI Blog2010 (1) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... r (Appeals), Meerut-II. Under the impugned order, the appeal filed by the appellants against the order of the adjudicating authority has been dismissed. The Assistant Commissioner, Bareilly by his order dated 18-10-2006 had confirmed the demand of Rs. 22,075/- under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 against the appellants which was raised vide show cause notice dated 28-10-2005 and had imposed penalty of equal amount under Rule 15 of the said Rules and also had directed the appellant to pay interest on the amount due and payable under the said order. 2. Few facts relevant for the decision are that the appellants are engaged in manufacture of sugar and molasses classifiable under Chapter Heading No. 1701 and 1703 of the Central Excise Tariff Act, 1985. The appellants availed Cenvat credit to the tune of Rs. 22,075/- during the period May 2005 to August 2005 on the items namely welding electrodes classifiable under Heading 83.11, asbestos jointing sheets classifiable under sub-heading 68.05 and M.S. Plates as the capital goods. Disputing the claim of the appellants about entitlement to avail the Cenvat credit in relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kissan Sahkari Chinni Mills Limited v. CCE, Meerut-II in Excise Appeal No. E/625/05 delivered on 3-11-2009 and General Manager, Oswal Overseas Ltd. v. CCE, Meerut in Appeal No. E/1614/07-SM delivered on 19-1-2009 [2009 (240) E.L.T. 544 (Tri.-Del.)] in support of his contention. As regards the asbestos jointing sheets, the learned C.A. submitted that they are the components and accessories of sugar mills machinery classifiable under sub-heading 84.38 and drawing my attention to the decision of the Tribunal in the matter of KCP Sugar Indus. Ltd. v. CCE, Guntur reported in 2004 (178) E.L.T. 275 (Tri.-Bang.) submitted that the point is well settled by the said decision and it is in favour of the assessee and the same was totally ignored by the authorities below. For the above reasons, according to the learned C.A. the authorities below erred in disallowing the cenvat credit availed by the appellants in relation to the said items. He further submitted that since there were divergent views expressed by the Tribunal on the entitlement of the assessee to avail the Cenvat credit in relation to the above items, the authorities below clearly erred in imposing penalty. Drawing my attention t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r being perverse, nor the memo of appeal discloses any challenge to the said finding. Once it is established that the item is a consumable item and it looses its, not only the identity but also the existence on its use, one fails to understand how can it still remain to be the item which could satisfy the ingredients of the definition of the term "capital goods". 6. The expression "capital goods" has been defined in Rule 2(a)(A) as the goods enumerated under item Nos. (i) to (vii). Under item No. (i) the same enlists of the 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. Under item Nos. (iii) refers to components, spares and accessories of the goods specified at item No. (i) and (ii) of the said definition. It is with reference to this clause of the definition of the capital goods that the appellants claim welding electrodes to be the components and accessories of the goods specified at item No. (i) of the definition clause of the term "capital goods" under the said Rules. The Rules do not define the term components or accesso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or for providing output service. 9. In the case in hand, as already seen above, the authority below on analyses of all the materials on record in relation to the function and utility and use of the welding electrodes has come to a clear finding of fact that such product is a consumable product and the same looses its identity and existence on its use and indeed even in the course of the arguments on behalf of the appellants the learned Advocate fairly submitted that the welding electrodes are essentially used for fixing various parts of the machinery while replacing the worn out parts. In other words, the function or utility of the welding electrodes is restricted to fixing or the new components of the machinery, once the odd components are found to be worn out or are found not fit for use. Obviously, in the process, the welding electrodes loose their identity as well as existence and they can neither be components nor the accessories, bearing in mind, the context in which the items are understood as the capital goods within the meaning of the said expression under the said Rules. 10. In Hindustan Zinc Limited case, the Hon'ble Rajasthan High Court undoubtedly was dealing wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Cenvat Credit Rules, 2004, it is not necessary that the capital goods should be used for producing or processing of final goods or for bringing about any change in any substance for the manufacture of final product. Under the definition in the said Rules, what is required is that the capital goods must be those used in the factory of the manufacturer of the final product. Being so, the decision of the Rajasthan High Court in relation to the issue of capital goods is of no help to the appellants in the case in hand. 12. With reference to the issue relating to the inputs after referring to the J.K. Cotton Spg. Wvg. Mills case and quoting a sentence from the decision of J.K. Cotton case to the effect that "there need not be ingredients or commodities used in the processes, nor must they be directly and actually needed for "turning out or the creation of goods", it was observed that "the expression 'in manufacture of goods' should normally encompass the entire process carried on by the dealer, of converting raw materials into finished goods, where any particular process, or activity, is so integrally connected with the ultimate production of the goods, but for that process, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim pertaining to the asbestos jointing sheets, undoubtedly, the appellants are justified in making grievance about the same. As rightly pointed out by the learned C.A. for the appellants, the issue in that regard is no longer res-integra and stands concluded pursuant to the decision of the Tribunal in KCP Sugar Inds. Ltd., (supra). It was clearly ruled therein that the asbestos packing/compressed asbestos fibres used for preventing leakage in pipes and are to be considered as the components or integral parts of sugar machinery which falls under Chapter 84. Being so, the authorities below clearly erred in disallowing the Cenvat credit availed by the appellants in relation to the asbestos jointing sheets. To that extent the impugned order need to be interfered with. 15. Learned C.A. for the appellants is also justified in contending that the authorities below totally ignored the fact that the amount of Rs. 22,075/- also included an amount of Rs. 3,350/- in relation to the credit availed by the appellants pertaining to M.S. Plates and that was not the subject matter of proceedings before the adjudicating authority. Show cause notice nowhere referred to M.S. Plates and it was ne ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
