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M/s Hyderabad Industries Ltd. Versus CCE, Guntur

Cenvat Credit - eligible inputs - appellant had used the various items (MS Plates, Angles etc.,) for fabricating /assembling /erection of plant, machinery and buildings - original authority observed that appellant is not eligible for credit as the subject items are used for construction of building - Held that:- the reliance made by authorities below on the case of Vandana Global Ltd. [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)], to disallow the credit on MS items used for machines/equipment is m .....

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- Ms. Sulekha Beevi, C.S., Member (Judicial) Sh V.J. Sankaram, Advocate for the Appellant. Sh R. Manohar, Additional Commissioner (AR) for the Respondent ORDER The issue involved in the above appeals being the same, they were heard together and are disposed by this common order. 2. The appellants are engaged in manufacture of asbetos cement product like corrugated sheets and moulded goods. They are availing CENVAT credit facility on inputs and capital goods. During the scrutiny of ER-1 returns i .....

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gles, MS Channels, MS Tor Steel Round etc., which were used by appellant in construction of new plant. The credit availed for period November, 2008 to June, 2009 is of ₹ 46,51,208/-. The appellant availed credit of ₹ 22,43,545/- being the first 50% of CENVAT credit of capital good received during the period from November, 2008 to March, 2009. The balance 50% of CENVAT credit of ₹ 22,43,545/- was availed during the month April 2009. The appellant also availed 50% of Credit on su .....

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s noted that appellant had used the subject items (MS Plates, Angles etc.,) for fabricating /assembling /erection of following: 1. Plant shed 2. Machinery equipment 3. Generator Shed 4. Fibre/Cement Storage shed 5. Fibre preparation/Handling 6. Cement handling equipment 7. Fly ash handling equipment 8. Pulp handling equipment 9. Mixing & slurry preparation Cone tanks and water Recirula 10. Main machine & vaccums area 11. Sheet handling equipment 12. Heating system & Accessories 13. W .....

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g aggrieved, the appellant filed appeals before the Commissioner (Appeals) and vide order impugned herein, the Commissioner (Appeals) upheld the order passed by original authority. The appellant is thus before the Tribunal. 5. I have heard both sides. 6. The learned counsel Sh. V.J. Shankaram explained the purposes for which the MS Angles, MS Beams, MS Channels, Rebar etc., were used. The plant was undergoing expansion and subject items were used mainly for machineries. Some quantity of subject .....

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be used with capital goods of clauses (a) to (c) of Explanation 1 of Rule 57Q and classifiable under any chapter heading are eligible for availment of Modvat credit. That this circular is not withdrawn and is still in force. 7. The relevant portion of the Circular is reproduced as below: The matter has been examined w.e.f. 23.07.1996, capital goods eligible for credit under Rule 57Q have been specified either by their classification or by their description. Clauses (a) to (c) of Explanation (1) .....

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cessories of the specified goods irrespective of their classification. The same was the position prior to amendment in Rule 57Q (i.e. prior to 23.07.1996) when credit was available on components, spares and accessories of the specified capital goods irrespective of their classification . 8. Clauses (a) to (c) of the explanation (1) annexed to Rule 57Q of the erstwhile Rules covered specified capital goods falling under chapters 82, 84, 85 and 90 and clause (d) covered components, spares and acce .....

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admissible on the MS Angles, MS Channels, MS Beams etc. Credit would be admissible to such goods falling under the category of components, parts and accessories of capital goods. That parts, spares and components referred in the definition of capital goods as per the Circular No. 276/110/96 dated 02.12.1996 need not fall under chapter 82, 84, 85 and 90. That credit has been rightly denied observing that subject items do not come within chapter 82, 84, 85 and 90 or under parts, components or acc .....

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s falling under chapter 73 which are used as structural support to plant and machinery. That by applying the user test, these items become component of machineries and credit could not be denied on the ground that these items were not covered under definition of capital goods, under erstwhile Rule 57Q of Central Excise Rules, 1944. 11. The original authority has arrived at the conclusion that the impugned items are used in construction work, to make wall erections, foundations, sheds, support st .....

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aration/handling equipment, Cement handling equipments, Fly ash handling equipment, pulp handling equipment, Mixing & slurry preparation cone Tanks & Water recirula, Main machine and Vaccums area, sheet handling equipment, Heating system & Accessories, wet waste handling equipment, captive power-chimney, EOT crane handling equipment. Per se, it can be seen that the conclusion of the authorities below that the impugned items were used for civil construction works is incorrect. They we .....

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rred to the erstwhile definition of capital goods (explanation to Rule 57Q), and observed that the definition of capital goods is very wide. At this juncture, the Board Circular No. 276/110/96 TRU - dated 02.12.1996 becomes relevant. Further, as per definition of capital goods contained in Rule 2 (a), those goods falling under the clause A (i) to A (viii) when used in the factory of the manufacturer of the final product would come within the definition of capital goods. The activities carried ou .....

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onsidered to be part or accessory of the machinery and that credit is not admissible. The Hon ble High Court in the case of India Cements Ltd., Vs CESTAT, Chennai [2015 (321) ELT 209 (Mad)] following the ratio laid in Commissioner Vs Rajasthan Spinning & Weaving Mills Ltd., [2010 (255) ELT 481 (S.C.)] held that credit is admissible on MS items used for erection of capital goods when without such structural, the machinery could not be erected or put to use. 15. In Mundra ports and SEZ Ltd., V .....

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