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M/s. Aarti Industries Ltd. Versus Commissioner of Central Excise, Thane II

2016 (3) TMI 1040 - CESTAT MUMBAI

Cenvat credit denied - various items namely aluminium coils, S.S. Sheets, plates channels, M.S. angles etc. - revenue has declined to accept them as capital goods - Held that:- Keeping in view the law laid down by the Hon'ble High Courts and the Supreme Court in Rajasthan Spinning & Weaving Mills [2010 (7) TMI 12 - SUPREME COURT OF INDIA ] and M/s. Lloyds Metals and Engg Ltd.[2014 (8) TMI 913 - CESTAT MUMBAI ], it is of the considered view the appellants are entitled to CENVAT Credit on all the .....

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s interpretation by different benches, then in that situation, extended period of limitation should not be invoked. As in that situation, no malafide can be attributed on the part of the appellants so as to justify invoking the longer period of limitation. Therefore, on limitation also I find that the entire demand except ₹ 14,206 is beyond limitation. - Appeal No. E/1260/11, E/1641, 1642/12- Mum - Dated:- 18-1-2016 - MR. S.S. GARG, MEMBER (JUDICIAL) For the Petitioner : Shri Archit Agarwa .....

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eals are disposed of by a common order. For convenience, the facts of appeal no. E/1641/10 are taken. 2. Briefly the facts of the case are that the appellants are engaged in the manufacture of excisable goods namely bulk drugs classified under Chapter 29 of Central Excise Tariff Act, 1985. The appellant had availed the credit of the duty on capital goods namely aluminium coils, S.S. Sheets, plates channels, M.S. angles etc. classified under chapter heading 72. As per the department the goods fal .....

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. Thereafter show-cause notice dated 23.03.2009 was issued demanding inadmissible CENVAT Credit of ₹ 3,61,334/- under proviso to Section 11A(1) of Central Excise Act, 1944 read with Rule 14 of CENVAT Credit Rules, 2004 along with interest and penalty. Thereafter by adjudication order the Dy. Commissioner upheld the show-cause notice vide order dated 29.02.2012 and thereafter appellant filed appeal against the Order-in-Original and the ld. Commissioner upheld the Order-in-Original and dismi .....

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been used for fabricating process equipments, fabricating reactor vessel, storage tanks etc., therefore the same should have been allowed by the Commissioner (Appeals) being an integral part of the vessel, tank and therefore the same is classified as capital goods. He further submitted that the reactor vessel is a must for the production process as the reaction between the chemicals takes place in the reactor vessel. Similarly storage tanks are used for storing various raw materials required for .....

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cturing. The only condition is that capital goods should be used in the factory of manufacturer. He also submitted that as per explanation (2) of Rule 2k which contains the definition of input it is very clear that the input includes the goods which are used in the manufacture of capital goods which are used within the factory of manufacture. He further submitted that in appeal no. E/1260/2011, the Commissioner (Appeals) vide Order-In-Appeal No. M-I/AV/207/2011 dated 19.04.2011 has observed as f .....

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xplanation was only clarifactory and did not change the definition of inputs. This contention of the appellants therefore cannot be accepted. The appellants have relied on the decision of CCE, Jaipur V/s. Rajasthan Spinning & Weaving Mills Ltd. (2010-285-ELT-481-SC) in support of their contention that the steels, plates used in the fabrication of chimney were eligible as inputs. However I find that this decision was in the context of fabrication of chimney for diesel generating set. In r .....

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Tri. - LB). In the said judgment, the Hon ble Larger Bench observed that the definition of input has been amended w.e.f. 07.07.2009 wherein the credit of various items used for making support structure has been excluded and such amendment will have retrospective effect. He submitted that the above observation of the Hon ble Larger Bench is found to be erroneous by the Hon ble Gujarat High Court in the case of M/s. Mundra Ports and Special Economic Zone Ltd. reported in 2015-TIOL-1288-HC-AHM-ST. .....

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mendment as there is nothing to suggest in the Amending Act that amendment made in Explanation 2 was clarificatory in nature. Wherever the legislature wants to clarify the provision, it clearly mentions intention in the notification itself and seeks to clarify existing provision. Even, if the new provision is added then it will be new amendment and cannot be treated to be clarification of particular thing or goods and/or input and as such, the amendment could operate only prospectively. In our o .....

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ners Limited Vs Union of India and others, reported in (2011) 11 SCC 408 =2011-TIOL-31-SC-CX would not be applicable to the facts of the instant case. Further the Hon ble Calcutta High Court in the case of M/s. Surya Alloy Industries Ltd. reported in 2014 (305) ELT 47 (Cal.) in para 8 has observed as follows: 8. The foundation of the order, passed by the Tribunal, is laid upon the judgment of the Larger Bench, rendered in the case of Vandana Global Limited (supra), which does not hold the field .....

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dings on the merit of the matter. This Court, therefore, feels that justice would be sub-served if the application, seeking waiver of the pre-condition deposit of duty, is considered afresh by the Tribunal. He further submitted that in view of the two judgments of the Hon'ble High Court, the law laid down by the Larger Bench in the case of M/s. Vandana Global Limited (Supra) is not a good law and the Explanation 2 amended on 07.07.2009 will not have retrospective effect. He also submitted th .....

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p capital goods. The decision of the Hon'ble Apex court will prevail over the decision of the Larger Bench of the Tribunal. Therefore, following the decision of the Rajasthan Spinning & Weaving Mills Ltd. (supra), I hold that the respondent are entitled for Cenvat Credit on the items in dispute during the impugned period, which has been used for setting up capital goods i.e. kiln, cooler and chimney. 4. Ld. Counsel also submitted that the entire demand is hit by limitation. He submitted .....

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to the show cause notice dt. 23.12.2009 that the demand period is from June 2006 to April 2008 and the issue involved is admissibility of Cenvat Credit on doors, false ceiling, compactor for document keeping, sheets for roofing, flooring for finished goods storage area, tube light fittings, etc. Appellant claimed the credit of these items as capital goods under Rule 2(a)(A) of the Cenvat Credit Rules, 2004. The issue of admissibility of Cenvat Credit on certain items and support structures was .....

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misstatement on the part of the appellant with intention to evade any duty. In the facts and circumstances of the present appeal, extended period cannot be invoked. Without going into the merits of the case, the appeal of the appellant is required to be allowed on time bar alone as demand show cause notice had been issued beyond the period of one year from the date of taking Cenvat Credit. 5. Ld. Counsel also submitted that the Tribunal in similar situation has taken a view that when decisions o .....

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A/58186/2013-SM[BR] dated 05.11.2013 4) CCE, Raipur v. Baldev Alloys Pvt. Ltd - 2012-TIOL-388-CESTAT-DEL 5) CCE, Raipur v. Orion Ferro Alloys Pvt. Ltd. 2010 (259) ELT 84 (Tri.) 6) CCE, Raipur v. Rajaram Maize Products [2010 (258) ELT 539 (Tri.)] He further submitted that on the same issue our Appeal No. E/690/2012 was heard by the Honble Ahmedabad CESTAT on 09.06.2015. The Hon ble CESTAT vide Order dated 09.06.2015 allowed the appeal on limitation itself without going into the merits of the cas .....

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and perused the records. 8. In the present appeals, the dispute pertains to credit of various items namely aluminium coils, S.S. Sheets, plates channels, M.S. angles etc.which are used in the manufacturing and for making support of foundation structure of reactor and chimney which are categorically part of manufacturing process. The appellant has claimed CENVAT Credit on all these items being part of the capital goods whereas the revenue has declined to accept them as capital goods. Further, if .....

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n'ble High Courts have categorically held that there is nothing on record to suggest that in the Amending Act that amendment made in explanation 2 was clarificatory in nature. Further, I find that this bench of the Tribunal in M/s. Lloyds Metals and Engg Ltd. has held that in such circumstances the appellants are entitled to CENVAT Credit on the items in dispute during the impugned period, which has been used in setting up the capital goods by referring the decision of apex court in the case .....

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