TMI Blog2019 (5) TMI 1583X X X X Extracts X X X X X X X X Extracts X X X X ..... he Honble High Court and observed that the amendment made on 7-7-2009 cannot be held to be clarificatory and as such would be applicable only prospectively. The Madras High Court in M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX THE COMMISSIONER OF CENTRAL EXCISE, [ 2015 (3) TMI 661 - MADRAS HIGH COURT] noticed VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] but relied upon the Apex Court judgment in COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS LTD. [ 2010 (7) TMI 12 - SUPREME COURT] , wherein the Apex Court has considered an issue of steel plates and MS channels used in the fabrication of chimney for diesel generating set and after considering it, the Apex Court allowed the cenvet credit on MS Rod, sheets, MS Channel, MS Plate etc. used for fabrication of structures to support various machines/capital goods. Thus, since items used by the respondent-assessee were used as structure to hold the capital goods, hence, it is wrong to say that respondents are not eligible to CENVAT credit. Therefore, in our considered opinion, the Tribunal has rightly allowed the appeal and the reasoning giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the Customs Excise Service Tax Appellate Tribunal, Allahabad is not substantial as in terms of Rule 2 (k) of the Central Credit Rules 2004. 4.Shorn off unnecessary details, the facts of the case are as under : Respondent-assessee, M/s Mankapur Chini Mills, is engaged in manufacturing V.P. sugar, molasses, SDS and absolute Denatured Alcohol. It has availed Cenvet Credit Facility under Cenvat Credit Rules, 2002 upto 9.9.2004 and under Cenvat Credit Rules, 2004 w.e.f.10.9.2004. 5.During the course of audit for the period 2005-06 to September, 2008, it was noticed that the respondent-assessee had taken Cenvet credit on items, namely, M.S. Plates, M.S. Channels, H.R. Coils, M.S. Angles etc., which are falling under Chapter heading 72 and 73 of the Central Excise Tariff Act, 1985 as capital goods . 6.According to revenue, the aforesaid items did not appear to be covered under the category of capital goods in terms of Rule 2 (b) of the Cenvat Credit Rules, 2002 and Rule 2 (a) (A) of Cenvat Credit Rules, 2004, as the aforesaid items were either used by the respondent in repair or maintenance of existing plant or i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s erred in not applying the decision of this Court rendered in the case of Bajaj Hindustan Ltd. Vs. Union of India : 2013 (295) ELT 20 (All.), which is in favour of the department wherein it has been observed that Cenvat credit is not admissible on the inputs which were not used for manufacture of capital goods. 13.Per contra, Sri Rahul Agarwal, learned Counsel for the respondent has supported the decision of the Tribunal and has submitted that the respondent-assessee is manufacturer of sugar, molasses etc. which are excisable product. It takes CENVAT Credit on the excise duty/service tax paid by it under the CENVAT Credit Rules, 2004. During the period 2005-06 to August, 2008, the respondent-assessee availed CENVAT credit of ₹ 99,94,125/- on MS Plates, MS Channels, HR Coils, M.S. Angles etc. by treating these goods as inputs withing the meaning of Rule 2 (k) of the CENVAT Credit Rules, 2004. These goods were used in the fabrication of capital goods, staging/supporting structures and also for modification for plant and machinery, which were allegedly used in the factory of the respondent-assessee in the manufacturing process. 14.Learned Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 17.It has been contended by the learned Counsel for the respondent that the Gujarat High Court in Mundra Ports Special Economic Zone Ltd. Vs. C.C.E. Customs : 2015 (39) STR 726 (Guj.), the Madras High Court in India Cement Ltd. Vs. CESTAT, Chennai : 2015 (321) ELT 209 (Mad.) and Thiru Arooran Sugars Vs. CESTAT, Chennai : 2017 (355) ELT 373 (Mad.) have held the judgment of Vandana Global (supra) not good in law. Therefore, the reasoning of the Adjudicating Authority, which imposed the demand along with interest and also penalty on the respondent assessee, by relying upon the amendment in Explanation-2 to Rule 2 (k) and also Vandana Global (supra) is clearly unsustainable. 18.Insofar as the judgment relied by the revenue i.e. Bajaj Hindustan Ltd. Vs. Union of India : 2013 (295) ELT 20 (All.) is concerned, learned Counsel for the respondent-assessee has submitted that in Bajaj Hindustan Ltd. (supra), the Court was faced with the situation where the assessee had failed to demonstrate that the items on which it had claimed CENVAT credit had actually been used for fabrication of the goods used in the manufacture of final product. His submission is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that these items had been used either for repair and maintenance of plant and machinery or modification of their existing plant and machinery. The Original Authority, vide order dated 13.10.2010, disallowed the credit by holding that items used for repair and maintenance or modification of plant and machinery are not eligible for credit. It was also held that items embedded to earth are also not covered in the definition of capital goods and items of Chapter 72 and 73 are not eligible for the credit. 24.Not satisfied with the order dated 13.10.2010, the respondent-assessee had approached the Tribunal by means of Appeal No. E/686/2011-EX (DB). The Tribunal, after hearing the learned Counsel for the parties, allowed the appeal by means of order dated 15.5.2017, which is impugned in the present appeal. The operative portion of the order dated 15.5.2017 reads as under : Having considered the rival contention, I hold that the appellant is entitled to Cenvat credit on items of iron and steel in question as the same have been used for fabrication of capital goods, for repair and maintenance of capital goods, for fabrication of staging structures and su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red alongwith the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used for manufacture of final products or for any other purpose, within the factory of production. Explanation 1. - The high-speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever.- Explanation 2. - Inputs include goods used in the manufacture of capital goods, which are further used in the factory of the manufacturer. (emphasis supplied) 28.Definition of input under Rule 2 (k) was amended vide notification dated 7.7.2009. Amended provision inserted following clause in Explanation 2 by Cenvat Credit (Amendment) Rules, 2009 with effect from 7.7.2009: but shall not include cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bar (TMT) and other items used for construction of factory shed, in building or laying of foundation or making of structures for support of capital goods 29.Consequently, w.e.f. 7.7.2009, Explanation-2 to Rule 2 (k), as a whole, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, when such goods are used primarily for personal use or consumption of any employee; and (F)Any goods which have no relationship whatsoever with the manufacture of a final product. Explanation.- For the purpose of this clause, free warranty means a warranty provided by the manufacturer, the value of which is included in the piece of the final product and is not charged separately from the customer]. 31.From perusal of the circulars dated 2.4.2012 and 18.5.2012, it comes out that these circulars have been issued in the changed context of the definition of Section 2 (k) of Cenvat Credit Rules, 2004 and both circulars have no concern for the period in issue. Thus, we find that the reliance placed by the revenue in this regard has no substance. 32.On going through the record, we find that the Revenue has relied upon the larger Bench decision of the Tribunal in the case of Vandana Global (supra), wherein it was held that the explanation added to the definition of capital goods w.e.f. 07.07.2009 has to be held as explanatory and thus retrospective in nature. The said decision of the Tribunal was considered by the Honbl ..... 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