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2016 (6) TMI 766 - CESTAT HYDERABAD

2016 (6) TMI 766 - CESTAT HYDERABAD - 2016 (343) E.L.T. 1051 (Tri. - Hyd.) - Cenvat credit of the duty paid on cement as capital goods - cement used for installation and erection or plant and machinery - Credit denied on the ground that credit is not admissible on cement, as it does not fall under the category of capital goods and that credit is not admissible as input because cement is not used directly or indirectly in the process of manufacture of final product. - Held that:- the appellan .....

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ger Bench of Apex court in the case of Ramala Sahkari Chini Mills Ltd [2016 (2) TMI 902 - SUPREME COURT] I am of the opinion that appellants are eligible for credit of excise duty paid on cement, under the category of inputs. - Decided in favor of assessee. - E/22896 TO 22905/2014 - A/30350-30359/14 - Dated:- 17-5-2016 - Ms. Sulekha Beevi, Member(Judicial) Shri N.Anand, Advocate for the Appellant Shri P.Narasimha Rao, AR for the Respondent ORDER The issue that arises for consideration in these a .....

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d Cenvat credit of the duty paid on cement as capital goods. During different periods from January, 2004 to January, 2007, the credit was availed on excise duty paid on cement used for installation, and erection of capital goods used for manufacture of final products. Show cause notices were issued alleging that credit is not admissible on cement, as it does not fall under the category of capital goods and that credit is not admissible as input because cement is not used directly or indirectly i .....

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held eligible for credit. Following these decisions, the Commissioner (Appeals) allowed the appeal filed by the appellant, and set aside the order. 4. Being aggrieved the department filed appeal before the Tribunal. The Tribunal observed that there are several case laws wherein Cenvat credit is allowed on cement under category of capital goods. There were case law in favour of Revenue also. The Tribunal then vide judgment in CCE, Guntur Vs Andhra Sugars Ltd 2009(243) ELT 592(Tri-Bang) referred .....

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vide judgment reported in 2011 (272) ELT 113(Tri-LB). 5. After receiving the above answer to the issue referred, the Tribunal disposed the pending appeals vide Final order No.27113-27122/2013 dated 12-12-2013 by remanding all matters to the Commissioner (Appeals). In such order of remand, the Tribunal observed that it would be appropriate that the appellant herein (respondent in the said appeal) be given an opportunity to refute the Larger bench decision. In the remand proceedings, the Commissio .....

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it involved in a tabular form which is as below: Appeal Ref. Unit Period involved SCN ref.C.No. Credit involved Penalty imposed Remarks E/22896/2014 Bhimadole Jan. 2006 to Dec.2006 V/15/05/07 dt.25.1.07 2,55,816 2,55,816 OIA No.71/2007 dt.28.1.07 - Allowed appeal. CESTAT remanded the case E/22897/2014 Taduvai May. 2004 to April,2005 V/15/22/05 dt.25.5.05 8,544 1,000 OIA No.16/2007 dt.18.6.07 - Allowed appeal. CESTAT remanded the case E/22898/2014 Tanuku Jan. 2004 to Mar.2005 V/15/19/05 dt.6.6.05 .....

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07- Allowed appeal. CESTAT remanded the case E/22902/2014 Thaduvai May, 2005 to Feb. 2006 V/15/17/06 dt.1.5.2006 23,664 23,664 OIA No.18/2007 dt.18.6.07 - Allowed appeal. CESTAT remanded the case E/22903/2014 Saggonda Dec. 2003 to August. 2004 V/15/42/05 dt.3.10.05 6,67,116 3,96,558 10,000 OIA No.24/2007 dt.16.6.07 - Allowed appeal. CESTAT remanded the case E/22904/2014 Bhimadole May. 2004 to March, 2005 V/15/24/05 dt.25.5.05 2,67,240 10,000 OIA No.15/2007 dt.18.6.07 - Allowed appeal. CESTAT rem .....

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ant then had raised a contention before the Commissioner (Appeals) in the remand proceedings that if credit is not admissible under the category of capital goods, the appellant was eligible for credit of duty paid on cement as inputs . Before the amendment made to Explanation 2 of the Rule 2(k) - definition of input the claim of credit on cement and steel as inputs was being allowed. Cement was used indirectly in relation to manufacture of finished goods and whatever is used in the manufacture o .....

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final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production (ii) All goods, except light diesel oil, high speed di .....

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r (Appeals) in remand proceedings is correct. Though this plea was taken, the Commissioner (Appeals) has not considered or recorded any finding with regard to this plea. The Commissioner(Appeals) has merely accepted the allegation in the show cause notice that cement does not fall within the definition of capital goods or in the definition of inputs .It has to be mentioned that Tribunal had remanded the matter specifically observing that the appellant be given an opportunity to refute the Larger .....

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he appellant that cement was used for foundation and installation of plant and machinery. The first part of the definition of inputs as seen above, uses the word includes . The word include used in the definition of inputs is not restrictive. The definition of input during the material time did not exclude cement. Later by the amendment brought forth on 07-07-2009 the definition specifically excluded cement. Explanation 2 contained in the definition of input after 07-07-2009 is noticed as belo .....

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d as input for foundation and civil works. The words include goods used in Explanation 2 prior to 07-07-2009 had a wide connotation and could include anything including cement and steel items used for constructing the structure or for foundation on which capital goods would be affixed or mounted. Thus, appellant claims cement used for fixing capital goods are eligible for credit as they are indirectly related to manufacture of final products. Without fixing the plant, machinery, equipments firml .....

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ppellant has not been considered or analysed. The Hon ble High court in the case of CCE, Visakhapatnam-II Vs Sai Samhita Storages(P) Ltd 2011(270)ELT 33 AP held that credit is admissible on cement and steel items used as inputs for construction of warehouses. The Hon ble Court relied on the judgment laid in Maruthi Suzuki Ltd Vs Commissioner 2009(240) ELT 641(SC). 13. The interpretation of input rendered by Honble Apex Court in Maruthi Suzuki Ltd was doubted and the issue was referred to Larger .....

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ction. The definition of capital goods does not require that capital goods should be used in the process of manufacturing. The only condition is that capital goods should be used in the factory of the manufacturer. It cannot be disputed that cement is necessary for laying foundation to fix machinery , and for support structures of capital goods. It is the case of appellant that credit was not taken on cement used for construction of building or civil structure. They have availed credit only on t .....

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