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2016 (8) TMI 840 - CESTAT HYDERABAD

2016 (8) TMI 840 - CESTAT HYDERABAD - TMI - Cenvat credit - MS Channels, MS Angles, Plates, Rounds, Beams etc. - used in fabrication of supporting structures to Capital Goods during the period from 2007-08 to 2008-09 - Whether amendment of Explanation 2 to Rule 2(k) of CCR inserted vide Notification No. 16/2009-CE dt. 07/07/2009 will have retrospective effect - Held that:- it is clear from the Explanation 2 to Rule 2(k) that nowhere in the amendment, nothing has been explicitly stated or clarifi .....

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the statement purpose by the legislature, however such amendment can only throw more light on a existing provision but should not extinguish the rights availed of before the amendment. - Period of limitation - Held that:- I do not find any infirmity in the finding of Commissioner(Appeals) that in view of similar demand issued to the same respondent on identical issue for earlier period, which has been decided in their favour, the law of limitation will hit the issue of impugned demand. This .....

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pes, Towers & Tower Parts falling under Chapter 72 of the First Schedule to the Central Excise Tariff Act, 1985(CETA). They were availing CENVAT Credit of duty paid on inputs /capital goods and Service Tax paid on input services in terms of the CENVAT Credit Rules, 2004(CCR). During the course of verification of certain records, it was observed that the assesses had availed CENVAT credit on items like MS Channels, MS Angles, Plates, Rounds, Beams etc., falling under Chapter 72 of CETA which .....

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fect. Therefore, a show cause notice was issued to the assessee vide O.R.No.7/2013-Hyd-I-Adjn., dated 19.03.2013 proposing to recover an amount of ₹ 22,01,431/-towards irregularly availed Cenvat Credit. Adjudicating authority confirmed the demand of ₹ 22,01,431/- under Rule 14 CCR read with Sec.11A(2) and proviso to Section 11A(1) of CEA along with interest under Rule 14 of CCR read with Section 11AB of CEA and imposed penalty of ₹ 22,01,431/- under Rule 15(2) of CCR read with .....

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past for the period 2004-05 and 2005-06 (8/2005) which was ultimately decided in favour of the assessee, by the Commissioner (Appeals) vide Order-in-Appeal No.62&63/2006(H-I)CE, dated 16.10.2006; As the department was well aware of the subject issue, there was no case for invoking provisions for larger period in the second/subsequent show cause notice dated 19.03.2013. b. With regard to the merits of the matter, the Commissioner (Appeals) found that there is adequate evidence such as the iss .....

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als) further held that although, it is a fact that the subject MS/HR/SS items cannot be treated as capital goods by themselves, the fact that they were consumed in fabrication/manufacture of capital goods is evident on record; In fact, the subject MS/HR/SS items ought to have been treated as inputs, but not as capital goods. The incorrect treatment of the MS/HR items as capital goods, instead of being treated as inputs, cannot be a ground for denial of the eligible CENVAT Credit. Moreover, mere .....

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ned at Rule 2(a)(A)(ii) nor components, spares and accessories of the said goods as specified in the said Rule 2(a)(A)(iii) nor fit into any of the descriptions contained in Rule 2(a) (A) (vii) of the Rules ibid b. The legislature has specifically defined the expression capital goods under the Rule 2(a) of the Cenvat Credit Rules, 2004. If the capital goods were to include every product which is somehow related to the manufacturing process, then there is no need to provide a definition of the te .....

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under the Cenvat Credit Rules, 2004, the subject items cannot be treated as capital goods as these items have been used for creation of supporting structures for Overhead Cranes, EOT Cranes, Factory Shade, Coal Pulverisers etc. Accordingly, the order the Commissioner (Appeals) allowing credit on these items viz. M.S. Plates, beam, flats angles, Sheets etc. is not legal and proper. c. As per above Explanation 2 inserted vide Notification No. 16/2009-CE, dated 07.07.2009 to Rule 2(k) of CENVAT Cr .....

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ed on the decision of the Larger Bench of the Hon'ble CESTAT in the case of Vandana Global Ltd. Vs CCE, Raipur [ 2010 (253) ELT 440 (Tri.LB)], wherein, while examining the issue of admissibility of credit on capital goods and inputs, it was held that the goods like cement and steel items used for laying foundation and for building supporting structures" cannot be treated as either inputs for capital goods or as input in relation to the final products and therefore, no credit of duty pai .....

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context of providing credit of duty paid, have to be excisable goods. e. In the instant case, the assessee contends that they used the impugned goods in manufacture of capital goods which were in turn used in production activity. However, they failed to adduce any evidence that they declared the same in the ER -1 returns filed by them. 4. During the hearing, the on behalf of the appellant, the Id. AR Shri Nagraj Naik reiterated the grounds of appeal. He also submitted that the amendment made vid .....

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nce on record to hold that the subject MS/HR/SS items were used/consumed for the manufacture of various capital goods which in-turn were used within the factory for manufacture of dutiable final products and that these subject items ought to be treated as inputs. The learned advocate also submitted that the Commissioner(Appeals) was correct in holding that in view of demand on same issue for earlier period having been settled in their favour vide Order-in-Appeal No.62 & 63/2006 (H-I) CE dt. .....

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/2006(H-l)CE dt. 16/10/2006 in respect of the same respondent on same issue, whether the present demand is barred by limitation or otherwise. 7. In respect of the first issue, I find that the relevant portion of the notification of 2009 which brought the impugned amendment is reproduced below:- Explanation 2 - Input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer but shall not include cement, angles, channels, Centrally Twisted Def .....

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against the said Larger Bench decision was admitted by the Hon'ble Chhattisgarh High Court on 26/09/2011 in Tax Appeal No. 183 of 2010 filed by filed by Scania Steels and Powers Ltd. The view taken in Vandana Global case was also distinguished in a subsequent Tribunal judgement in the case of CC&CE, Vishakhapatnam vs. APP Mills [2013(291) ELT 585 (Tri. Bang.)]. The relevant portion of the order is reproduced below:- 4.1 Obviously, clause (i) of Rule 2(a)(A) is pari materia with cla .....

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.02, Chapter 85, of First Schedule to the Central Excise Tariff Act and ipso facto got covered under Sl. No. 3 of the table ibid. Hon ble Supreme Court further noted that the chimney attached to the DG set was undisputedly covered by Sl. No. 5 of the table ibid. On this basis, it was held that the chimney was an integral part of the DG set and, therefore, MS channels, plates, etc., used in its fabrication were to be treated as accessories in terms of Sl. No. 5 of the table ibid. This ruling was .....

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ery could be treated as capital goods . Indeed, it should be held to be an integral part of the machinery and hence to be covered by clause (i) ibid. If that be so, as held by the Hon ble Supreme Court in the aforesaid case, the plates, angles, etc., used for fabricating structural support are liable to fall within the purview of clause (iii) of Rule 2(a)(A). In the result, it has to be held that the MS angles, plates and rounds used by the respondent for fabricating structural support for machi .....

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tructing such supporting structure would not be capital goods for the purpose of CENVAT credit. This view of the Larger Bench is no longer valid as it runs contrary to the subsequent ruling of the Apex Court. It is also seen that the said Vandana Global judgement was disapproved by the Hon'ble High Court of Calcutta in the case of Alloy Industries Ltd. vs. UOI [2014(305) ELT 47 (Cal.)]. The relevant portion is reproduced below:- 8. The foundation of the order, passed by the Tribunal, is .....

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d the subsequent judgments of the Tribunal were placed before the Tribunal or not. Furthermore, the Tribunal did not record any findings 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. 8. In any case, it is a fundamental premise of jurisprudence that "one does not expect rights conferred by the Statute to be destroyed by events which took p .....

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. But given rights and liabilities fixed by reference to the past facts, matters or events, the law appointing or regulating the manner in which they are to be enforced or their enjoyment is to be secured by judicial remedy is not within the application of such a presumption". Thus the doctrine of fairness is also an important requisite in giving retrospective effect to amendments. In case, benefits were extended and availed as permitted in earlier law, it would be unfair to snatch them awa .....

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ase of CCE, Delhi-I Vs. Sharp Menthol (India) Ltd. [2015 (328) ELT 543 (Tri. Del.)]. The relevant portion is reproduced below:- 8.2.2 In this regard another plea of the Revenue is that by Notification No. 24/2010-C.E. (N.T.), dated 26-5-2010 the Notification No. 42/2001-C.E. (N.T.), dated 26-6-2001 was amended and as per the amended notification, the export of excisable goods which are chargeable to nil rate of duty or are wholly exempt from duty, other than goods cleared by 100% EOU, are n .....

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he amendment made to Notification No. 42/2001-C.E. (N.T.), dated 26-6-2001 by the amending notification dated 26-5-2010 restricts the scope of Rule 19 and after this amendment, the goods which are fully exempt from duty or are chargeable to nil rate of duty, cannot be exported under bond or LUT under Rule 19 and accordingly, if for manufacture of such exempted goods, any duty paid inputs have been used, the Cenvat credit of the duty paid on the inputs cannot be availed. Since this amendment adve .....

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e above said judgment, it is seen that there is no change in the circumstance and this Court had already considered the issue and held that the decision reported in 2011-TIOL-73-SC-CX = 2011 (270) E.L.T. 465 (S.C.) (Saraswati Sugar Mills v. Commissioner of Central Excise, Delhi - III) in Civil Appeal No. 5295 of 2003, dated 2-8-2011 is distinguishable on facts. This Court applied principles laid down in the decision reported in 2010 (255) E.L.T. 481 (Commissioner of Central Excise, Jaipur v. Raj .....

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ee in C.M.A. No. 1265 of 2014, following the abovesaid decision of this Court, dismissed the appeal filed by the Revenue. 15. Accordingly, following the principles laid down in the decision reported in 2010 (255) E.L.T. 481 (Commissioner of Central Excise, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd.) 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 asi .....

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is a correct interpretation of law and is supported by a plethora of judgments of various courts. 11. The specific issue in this appeal is also covered by the Tribunal's decision in the case of Ultra Tech Cement Ltd. Vs. CCE, Raipur [2016(332) ELT 356 (Tri. Del.)]. The relevant portion is reproduced below:- 8. It is not disputed that the eligibility of Cenvat credit on iron and steel items like MS Angles, Channels, etc. used inside the factory for fabrication of various machineries, acc .....

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it have to be excisable goods. Items used for supporting structures cannot be treated as inputs for capital goods. It was held that the Division Bench decision in the case of Bhushan Steel and Strips Limited, 2008 (223) E.L.T. 517 (Tribunal), is not correct view of the law. We find in the present impugned order, the original authority denied the Cenvat credit on iron and steel items on substantial reliance on this Larger Bench Decision of the Tribunal in Vandana Global (Supra). Apparently, the L .....

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