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2015 (10) TMI 1028 - CESTAT MUMBAI

2015 (10) TMI 1028 - CESTAT MUMBAI - TMI - CENVAT Credit - manufacture of capital goods in house - fabrication of immovable goods - use of goods falling under sub-heading 7208 and 7216 as inputs/capital goods - Exemption under Notification 67/95-CE - Held that:- Certain items of the plant and machinery such as uncoiler, looper, etc. were purchased from the market and embedded to earth and installed to form a part of the tube mill. Components purchased from the market were like motors, coupling, .....

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ecified chapters/heading their spare parts /components/accessories or otherwise specified and used in the factory of manufactured of final products are entitled to credit as capital goods. - Goods fabricated in question qualify as capital goods and also as inputs within the meaning of Rule 2(a) read with Rule 2(k) of the CENVAT Credit Rules, 2004. Accordingly, the assessee is entitled to CENVAT credit availed on the items in question for fabrication of the capital goods in question, further util .....

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hat the assessee, M/s. Chinteshwar Steels Pvt. Ltd., is engaged in the manufacture of sponge iron falling under Chapter 72 of the Central Excise Tariff. The assessee have availed CENVAT credit of duty paid on the inputs as well as capital goods including inputs utilised in the manufacture of capital goods under the provisions of CENVAT credit Rules, 2004. During the period of dispute i.e. in July, 2006, the assessee was setting up the plant by procuring various capital goods and inputs for the m .....

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of the following capital goods installed within the factory of production, the details of which are as follows: Name of the Input C. Sub-Heading Name of the Final Product C.H. Heading/CCR H. R Plate 7208.11 Material Handling System 8479.19 H.R. Coils 7208.31 Day BIN Kiln Feed Storage Tank under Rule 2(a)(vii) Channels, Angle and Joist 7216.10 Intermediate BIN -do- Product Storage BIN -do- G.A. to Crusher & Screen Bids 8416.10, also Rule 2(a)(i) Day BIN Kiln Injection 8419.00 G.A. of Primary .....

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credit on the iron and steel and other items used in the manufacture of aforementioned capital goods on the ground that the respondent have treated all the goods falling under sub-heading 7208 and 7216 as inputs/capital goods used in the factory of production. As per the definition of 'capital goods' CENVAT credit taken by the assessee on goods falling under Chapter 72 is not covered and accordingly it appears that the assessee has taken wrong credit being 50% on the goods like channels .....

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of Central Excise 2005 (187) ELT 145 (SC). As regards the Chartered Engineer's certificate submitted by the assessee to the effect that the inputs in question had been consumed and used in the fabrication of the plant/machinery and material handling systems, it was observed that the said items being immovable in nature are not excisable items and accordingly do not fall under the definition of capital goods. As regards the alternative argument made by the assessee that the said items of inpu .....

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nterest. Further, penalty was imposed under Rule 15 of the CENVAT Credit Rules; 2004 read with Section 11AC of the Central Excise Act, 1944 and further, penalty of equivalent amount was imposed under Rule 25 of the CENVAT Credit Rules, 2002. Being aggrieved, the appellant preferred appeal before the Commissioner (Appeals). 5. The learned Commissioner (Appeals) recorded the following findings: "4. Personal hearing in the case was fixed on 28/11/2008. Shri P.V. Sadavarte, Advocate appeared fo .....

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e used in the manufacture of Capital goods which are used for manufacturing duty paid products. The manner of use of beams and angles have been indicated in the Chartered Engineer's Certificate. The Chartered Engineer Certificate has been discussed in the impugned Order-in-Original and summarily rejected without appreciating the exact usage of said inputs. In the instant case they submitted that they have availed and utilised only 50% of credit out of lack of knowledge of law, whereas they a .....

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may be decided accordingly. 4.2 The Departmental Representative has nothing to add than what is stated in Order-in-Original. 5. I have carefully gone through the records of the case before me including the submissions made at the time of personal hearing. My observations are as under: (1) OIO dtd. 1.3.2008 was received by the appellant on 15.3.2008 and the appeal was filed on 29.4.2008. The appeal is in time under Section 35 of CEA, 1944. (2) It is the fact that this issue is no longer integra .....

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excisable goods as they were attached to earth found to be irrelevant. Rule 2(k) of Cenvat Credit Rules, 2002 [para 5]. (3) In the case of Divi's Laboratories Ltd., vs. CCE, Vishakapatnam, the CESTAT Bangalore reported as 2005 (191) ELT 1065 (Tri. Kolkata) held that Capital goods - Structurals - Angles, Channel, beams, pipes, M.S. Tubes, Plane Plates, flats, cable trays, SS Sheets used as parts of a technological structures which support a reaction vessel or used in particular equipment in .....

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rth is no reason to deny Cenvat Credit on inputs used therein. (5) It is an admitted fact that the inputs were used in the manufacture of Capital goods, its parts and supporting structures within the factory of the manufacturer. As such I hold that the Credit is admissible under Cenvat Credit Rules. Since there is no liability to pay duty the question of payment of any interest and penalty does not arise." 6. The Commissioner (Appeals) was accordingly pleased to allow the appeal setting asi .....

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goods for production which are in the nature of civil construction of work, supporting structure, storage tank and working platform and hence cannot be considered as component/spares and accessories specified under Clause (i) and (ii) of the definition of 'capital goods' under Rule 2 (a) of the CENVAT Credit Rules, 2004. It is further contended that the items, fabricated out of the inputs in question being immovable property, are not excisable and hence the same are not admissible. Howev .....

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nputs which are used in the manufacture of exempted goods except under circumstances mentioned in sub-rule (2). Reliance is placed on the rule in the case of Vandana Global Ltd. vs. Commissioner of Central Excise 2008 (230) ELT 169 wherein it has been held that CENVAT credit is not admissible on fabrication of supporting structures which supports the plant and machinery. Further reliance was placed on CBEC Circular No. 154/26/99-CX.4 dated 15/01/2002 wherein relying on the opinion of the Solicit .....

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In the case of integrated plant/machinery as a whole may or may not be goods. For example, plants for transportation of material (such as handling plants) are actually a system or net-work of machines. The system comes into being upon assembly of its component. In such a situation there is no manufacture of 'goods' as it is only a case of assembly of manufactured goods into a system. This cannot be compared to fabrication where a group of machines themselves may be combined to constitute .....

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ld be allowed on items which are parts and accessories of machines used in the factory and also on materials used in fabrication of such items. CENVAT credit is not available on goods which are used for erecting machine and construction of foundation or supporting structures basically because these items become immovable property. The learned AR further relies on the ruling of the hon'ble Allahabad High Court in the case of Upper Ganges Sugar & Industries Ltd. vs. Commissioner of Central .....

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bring about any change in any substance or manufacture of final products and thus, these were not capital goods as defined in explanation to Rule 57Q of erstwhile Central Excise Rules, 1944 or under Explanation 1(a) of Rule 58Q. 8. In reply, the learned counsel for the assessee, Shri Sadavarte, states that Revenue has not disputed the facts that the inputs were received in the factory, such inputs were purchased on valid duty paying documents, that the credit was taken on valid duty paying docum .....

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s failed to take into account the further development of law, very clearly provides for CENVAT credit, in view of the CENVAT Credit Rules, 2004. Revenue has erred in denying the CENVAT credit on the basis of decisions prior to 2004 rendered in view of the law at that time. It is further contended that the Revenue had travelled beyond the scope of show cause notice as credit was proposed to be denied on plates, angles, channels, etc. falling under Chapter 72 as the assessee has taken credit treat .....

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certificate who has certified that for the manufacture of capital goods as in the aforementioned table, the inputs in question had been utilised. Further the adjudicating authority has gone beyond the scope of show cause notice by confirming the proposed demand treating the fabrication in question as immovable property, there being no such allegation in the notice nor a proposal. 8.1. The learned counsel further contends that the impugned order of the learned Commissioner (Appeals) is correct an .....

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ant acquired various plant and machinery and installed them for making a complete unit for production of the steel tubes. Certain items of the plant and machinery such as uncoiler, looper, etc. were purchased from the market and embedded to earth and installed to form a part of the tube mill. Components purchased from the market were like motors, coupling, gear boxes, bearing, castings etc. These were assembled and installed on the site to form part of the tube mill which was also covered in the .....

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mestone and crushing in the mines adjacent to the cement factory of the assessee. CENVAT credit was availed on the items being capital goods like limestone crusher, mining equipment, etc. It was held that only the items falling under specified chapters/heading their spare parts /components/accessories or otherwise specified and used in the factory of manufactured of final products are entitled to credit as capital goods. 9. Further, the ruling in the case of Vandana Global Ltd. vs. CCE 2008 (230 .....

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