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2017 (6) TMI 796 - CESTAT BANGALORE

2017 (6) TMI 796 - CESTAT BANGALORE - TMI - CENVAT credit - steel and cement - whether the appellants are entitled to CENVAT credit availed on steel and cement used in the construction of storage silos and packing plant? - Held that: - in the definition of capital goods as contained in Rule 2(a) of CCR, 2004 storage tank has been specifically included in the definition of capital goods - the issue is squarely covered in favor of the appellant by various decisions wherein it has been specifically .....

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(A), wherein the Commissioner (A) has upheld the Order-in-Original and rejected the appeal of the appellant. 2. Briefly the facts of the present case are that the appellants are engaged in the business of packing of bulk cement into retail bags and are registered with the Department w.e.f 1.3.2007. The appellant's factory was started functioning during the 1999-2000 and they are receiving from their mother unit M/s. Rajashree Cement, Gulbarga and are packing it into retail bags and are clea .....

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cords and thereafter, pointed out that CENVAT credit on cement and steel used in the construction of packing plants and silos are in admissible. They have recorded the statement of the Deputy Manager (Accounts) and thereafter, the appellants were issued show-cause notice dated 6.8.2010 proposing to demand CENVAT credit of ₹ 41,51,419/- allegedly taken wrongly during the period July 2009 to April 2010 along with interest and also proposed penalty. After following due process of law, the Add .....

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s not sustainable in law as the same has been passed without considering all the submissions made by the appellant and without following the binding judicial precedent on the same issue. He further submitted that in the impugned order, the Commissioner (A) has heavily relied on the decision of the Larger Bench in the case of Vandana Global Ltd. reported in 2010 (253) ELT 440 and the amendment to Explanation 2 to Rule 2(k) of CCR, 2004 to deny the credit on cement and steel items used in the manu .....

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product. The definition of inputs as defined in Rule 2(k) of CCR, 2004 as existed prior to insertion of the Explanation is reproduced as under: Rule 2(k) "input" means- (i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessori .....

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or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever. Explanation 2 - Input include goods used in the manufacture of capital goods which are further used in the factory but shall not include cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated (TMT) bar and other items used for construction of factory shed, building or laying foundation or making of structures for support of capital goods". He further s .....

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Ltd.: 2012 (280) ELT 176 (Kar.) Bannari Amman Sugars Ltd. vs. CCE: 2010 (250) ELT 326 (Kar.) He also submitted that cement and steel used in the construction of packing plant is also allowable as credit. Cement and steel is used in the construction of parts of packing plant having facilities like conveyors bag packers machine, etc., which are capital goods as per Rule 2(a) of CCR and for this submission, he relied upon the following decisions: Ultratech Cement Ltd. vs. CCE, Jaipur: 2017-TIOL-07- .....

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becoming immovable property is irrelevant and the eligibility of credit has to be decided at the stage before becoming part of immovable property and for this submission, he relied upon the following decisions: CCE, Bangalore-II vs. M/s. SLR Steel Ltd.: 2012 (280) ELT 176 (Kar.) Monnet Ispat & Energy Ltd. vs. CCE, Raipur: 2015 (330) ELT 711 (Tri.-Del.) Jayaswal Neco Ltd. vs. CCE, Raipur: 2015 (319) ELT 247 (SC) CCE vs. India Cements Ltd.: 2014 (310) ELT 636 (Mad.) Learned counsel further sub .....

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ional High Court of Karnataka in the case of SLR Steels Ltd. cited supra. 5. On the other hand, the learned AR reiterated the findings of the impugned order and submitted that the amendment to the definition of inputs vide Notification No.16/2009 dated 7.7.2009 excludes cement, angles, panels, CTD, TMT and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods and therefore, these items cannot be considered as inpu .....

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ind that the only issue involved in the present appeal is whether the appellants are entitled to CENVAT credit availed on steel and cement used in the construction of storage silos and packing plant. Further, I find that in view of the decision of Karnataka High Court in the case of SLR Steels Ltd. cited supra, it has been held that storage tanks is a capital goods specified in Rule 2(a) of CCR, 2004. Further, in the definition of capital goods as contained in Rule 2(a) of CCR, 2004 storage tank .....

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