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M/s Bajaj Hindustan Ltd. Versus CCE & ST Allahabad (Now CCE Lucknow)

2016 (8) TMI 343 - CESTAT ALLAHABAD

Cenvat credit - Entitlement - Steel goods - Held that:- by relying on the finding of Hon'ble Madras High Court in the case of India Cements Ltd. Vs. Cestat [2015 (3) TMI 661 - MADRAS HIGH COURT] and Hon'ble Gujarat High Court in the case of Mundra Port & Special Economic Zone Ltd. Vs. CCE [2015 (5) TMI 663 - GUJARAT HIGH COURT], Shape & Section, angles, M.S. Plates/rounds, beams, rails etc. and also welding electrodes used in fabrication/construction of capital goods including structural support .....

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Appellant: Shri Pradeep Kumar Mittal, Advocate Present for the Respondent: Shri D.K. Deb (Assistant Commissioner) A.R. ORDER The issue in this appeal are - i) Whether the appellant, a manufacturer of Sugar, is entitled to Cenvat credit on Steels goods such as Shape & Section, angles, M.S. Plates/rounds, beams, rails etc. falling under Chapter Heading 72, 73 & 83 of CET Act, also welding electrodes used in fabrication/construction of capital goods including structural support, etc. for th .....

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1,03,34,766 on steel items like Shape & Section, Angles, M.S. Plates/rounds, Beams, Rails etc. as inputs in construction/fabrication of structural supports embedded to earth, Frame works, working platforms, etc. Such goods as per Revenue are neither inputs nor capital goods as defined in Rule 2 of CCR, 2004. Accordingly show cause notice dated 01.3.2012 was issued for recovery of Cenvat taken ₹ 1.03,34,766/-, along with interest & penalty was also proposed. 4. The appellant contes .....

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on of appellant that they have fabricated (i) Boiler accessories, (ii) Accessories of Boiling house (centrifugal machine, crystalliser, Evaporator, Juice clarifier, Juice Sulphiter, Pan Rotary Screen, Sulphur Furnace, Water Tank (iii) Mill House accessories (Cane carrier, Cane gantry Cane unloader, Fibrizer etc. (iv) Drier House accessories (Centrifugal machine, Sugar grader) (v) Accessories of Cable tray, control panel, D.G. Set, Gantry, Transformer; it was held that the appellant have used the .....

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which welding electrodes have been used are not goods, then welding electrodes cannot be considered as input eligible for credit Further the explanation -2 of Rule 2(k) of CCR, 2004 inserted wne.f. of 07.7.2009 was held to have retrospective effect following Larger bench ruling of this Tribunal in Vandana Global Ltd, Vs. CCE Raipur (Supra). On the issue of applicability of extended period of limitation, it was held that same is applicable as mere periodical audit by Revenue is not enough to infe .....

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asses chargeable to Central Excise duty. The dispute is in respect of Cenvat credit in respect of MS Angles, Channels, Plates etc. which according to the appellant were used for repair and maintenance of the as well as for fabrication of sugar machinery. The Cenvat credit of ₹ 71,090/- was taken in respect of welding electrodes and credit of ₹ 99,342/- was taken in respect of steel items during the period from January, 2009 to August, 2009. The department being of the view that these .....

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xcept for reduction of penalty to ₹ 20,000/-. In this order, the Commissioner (Appeals) held that the welding electrodes used for repair and maintenance are not eligible for Cenvat credit either as inputs or as capital goods and in respect of steel items, while observing that these items were used for fabrication of various mill house machinery such as Cane Carrier side plate and Leveller/Chopper Hoods, Bagasse Cilo Pipe, Bagasse Carrier, Sulphur Furnace, Juice Sulphiter, Pan Crystalizer, .....

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ri. - LB). Against this order of the Commissioner (Appeals), this appeal has been filed. 2. Heard both the sides. 3. Shri G.K. Mahajan, Advocate, the learned Counsel for the appellant, pleaded that so far as welding electrodes are concerned, their use in repair and maintenance of the plant and machinery is not disputed at any stage, that there are judgments of three High Courts - judgment of Hon ble Rajasthan High Court in the case of Hindustan Zinc Limited v. Union of India reported i .....

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el, MS Plates and MS Angles, the same have either been used for fabrication of various items of sugar mill machinery or for repair and maintenance of sugar mill machinery, as has been observed by the Assistant Commissioner in his Order-in-Original as well as in the show cause notice, that Commissioner (Appeals) has in his order has wrongly mentioned that part of the steel items were used in erection of supporting structures for machinery, as there is no such allegation as in the show cause notic .....

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for Cenvat credit and this civil appeal filed against this judgment of Hon ble Rajasthan High Court has been dismissed by the Apex Court vide judgment reported in 2007 (214) E.L.T. A115 (S.C.), that the steel items used for fabrication of various items of sugar mill machinery like Cane Carrier side plate and Leveller/Chopper Hoods, Bagasse Cilo Pipe, Bagasse Carrier etc. being sugar mill machinery and, hence, covered by Chapter 84, would be eligible for Cenvat credit as input, as the definition .....

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erein it was held that welding electrodes used for repair and maintenance of the plant and machinery are not eligible for Cenvat credit. 5. I have considered the submissions from both the sides and perused the records. 6. So far as eligibility for Cenvat credit of the welding electrodes used for repair and machinery of the plant and machinery is concerned, this issue stands decided by the judgment of three High Courts, as mentioned above - judgment of Hon ble Rajasthan High Court in th .....

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. v. CCE, Tirupati (supra), it is the judgment of the other three High Courts which would hold the field. Moreover, repair and maintenance is an activity without which manufacturing activity would not be commercially feasible even though theoretically it may be possible to carry out manufacturing activity without repair of plant and machinery. Apex Court in the case of J.K. Cotton Spg. & Weaving Mills Co. Ltd. v. Sales Tax Officer, Kanpur reported in 1997 (91) E.L.T. 34 (S.C.), while interpr .....

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manufacture of in the above manner, the scope of the expression - used in or in relation to manufacture, whether directly or indirectly in the definition of input in Rule 2(k) of the Cenvat Credit Rules, 2004 would be much wider. Moreover, Hon ble Calcutta High Court in the case of Singh Alloys & Steel Ltd. v. Assistant Collector of Central Excise reported in 1993 (66) E.L.T. 594 (Cal.) has held that the definition of input does not depend on what ought to be used but what is commercially ex .....

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e, the same would not be commercially feasible. The question as to whether repair and maintenance is an activity distinct and separate from manufacture has nothing to do with the question as to whether repair and maintenance has nexus with manufacture. Looked at from criteria prescribed by the Apex court in the case of J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. Sales Tax Officer, Kanpur (supra), the activity of repair and maintenance has to be treated as having nexus with manufacture and .....

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the Assistant Commissioner s order that the steel items were used for structural supports and hence the observation in the Commissioner (Appeals) order that part of the steel items were used for structural support is factually incorrect. Once it is accepted that steel items have been used for fabrication of various items of sugar mill machinery as mentioned in the Order-in-Original passed by the Assistant Commissioner on their repair and maintenance, these steel items would have to be treated as .....

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, CCE Raipur reported in 2010 (253) E.L.T. 440 (Tri. LB) that the Explanation -2 in Rule 2(k) of CCR, 2004, inserted w.e.f. 07.07.2009, have only prospective effect, observing that there is nothing in the Amending Act to suggest that the amendment made was clarificatory in nature. The Hon'ble Andhra Pradesh High Court in CCE Vs Sai Samhita Storages (P) Ltd. reported in MANU/ AP/ 0510/2011 have held that the assessee engaged in business of providing storage and warehousing services, is entitl .....

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of 2003 dated 02.8.2011 by the learned Standing Counsel appearing for the Revenue is concerned, we find that this Court had earlier considered the case of the assessee in two similar cases of the previous assessment years in CM.A, No. 1301 of 2005 dated 31.12.2012, where a reference was made to an order passed earlier in respect of the very same assessee. While dismissing the appeal filed by the Revenue, the Division Bench of this Court held as follows: 8 Even though learned standing counsel app .....

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ystem, etc. and that without these structural, the machinery could not be erected and would not function. 9. In the decision reported in AIT-2011-358-HC (The Commissioner of Central Excise Vs. M/s India Cements Limited), pointing out to Rule 57Q and the interpretation placed by the Apex Court in the decision in Commissioner of Central Excise Jaipur Vs, Rajasthan Spinning & Weaving Mills Ltd.(Supra) and in particular Paragraph Nos. 12 and 13, wherein the Apex Court had applied the user test b .....

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Excise, Delhi-III (Supra) is concerned, we do not think that the said decision would be of any assistance to the Revenue, considering the factual finding by the Tribunal therein in the decided case that the machineries purchased by the assessee were machineries themselves. Thus, after referring to the decision in CCE Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd.), the Apex Court held that in view of the findings rendered by the Tribunal that the machineries were complete and having rega .....

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l had merely passed a cryptic order by referring to the earlier decisions. We do not think that this would in any manner prejudice the case of the Revenue, given the fact that on the identical set of facts, the assessee's own case was considered by this Court and by following the decision reported in (Commissioner of Central Excise Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd), the Revenue's appeal was also rejected circumstances, this Civil Miscellaneous Appeal is dismissed. No .....

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. Rajasthan Spinning & Weaving Mills Ltd (Supra) and held that the Tribunal was justified in allowing the assessee's contention in respect of the very same assessee. 15. Accordingly, following the principles laid down in Commissioner of Central Excise Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd. (Supra) and the earlier decisions of this Court in C.M.A. No. 3101 of 2005 dated 13.12.2012 and C.M.A No, 1265 of 2014 dated 10.7.2014, we are inclined to allow the appeal, thereby set .....

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