TMI Blog2009 (1) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... against the Order-in-Original No. 10/2007 dated 29-3-2007. 2. The relevant facts that arise for consideration are the appellants herein are manufacturers of Paper and Paper Board falling under Chapter 48 of the First Schedule to Central Excise Tariff Act, (CETA), 1985. The appellants are availing Cenvat credit on the inputs, capital goods and input services used in the factory for manufacture of dutiable goods, under the provisions of Central Excise Rules, 2002 and the Cenvat Credit Rules, 2004. The appellant had taken up Mill Development Plan and expansion of pulp manufacturing plant with modern technology imported from Finland with the financial support of World Bank. In the process of such expansion and development, the appellants were procuring capital goods both imported and indigenous and availing Cenvat credit of the duty paid on said capital goods. It was noticed by the lower authorities, on scrutiny of the ER1s that the appellant had taken credit on certain ineligible items falling under Chapters 72 and 73. It was also noticed that at the plant expansion site, the goods were utilized in the expansion of the plant is for the construction of civil structures and to supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Act, 1944. (c) I order confiscation of the impugned goods on which Cenvat credit was taken and the Structures constructed by using said goods under Rule 15(1) of the Cenvat Credit Rules, 2004 read with Section 120 of the Customs Act, 1962 made applicable to like matters in Central Excise by virtue of Notification No. 68/63- C.E. dated 4-5-1963 as amended for contravention of various provisions of Cenvat Credit Rules, 2004. However, the assesses are given an option to pay the fine of Rs. 10,00,000/- in lieu of confiscation as per the provisions of Section 34 of the Central Excise Act, 1944. (d) I impose a penalty of Rs. 9,00,000/- under Rule 15(1) of Cenvat Credit Rules, 2004 for wrong availment of Cenvat credit on ineligible capital goods. 4. The learned Counsel appearing on behalf of the appellant would draw our attention to the photographs produced by the appellant before the Adjudicating Authority. He would specifically draw our attention to the photographs wherein the appellant has used the items in dispute, for the proposition that these items are supporting structures of the plant which manufactures Paper and Paper Board. He would also draw our attention to page N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inery and to provide access to various machines and cannot be considered as parts and accessories of any machine or machinery, which is used in producing or processing of any goods." This is found in paragraph 3 of the show cause notice. This fact is also not disputed by the Adjudicating Authority but has denied the benefit of the Cenvat credit only on the ground that there is no correlation or there is no evidence to show that the inputs under dispute are used as components, spares and accessories for any equipment or any machinery. We are unable to understand the logic. It is accepted in the show cause notice that the items under dispute were used by the appellant for the construction of structures for supporting the machinery and the Adjudicating Authority in the impugned order comes to a conclusion that there is no evidence. Be that as it may, we find that this Bench of the Tribunal in the case of Divi's Laboratories Ltd. v. CCE, Visakhapatnam (cited supra) at paragraph 5 held as under: 5. We have gone through the records of the case carefully. The items like angles, channels, beams, pipes, MS tubes, plane plates, flats, cable trays, SS sheets are used as part of a technologi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to this case. It has been held that the supporting structures of steel are capital goods. In view of this, we have no hesitation in extending Modvat credit for the item in Serial Nos. 1 to 5 in the above Tabular Column. Without the structures the capital goods could not function and consequently final products could not be manufactured in the absence of machines supported by the structures. Therefore, structures are covered within the ambit of the term "plant". As regards the items at Sl. No. 6, GI Pipe Platform Ladders, it was contended by the learned SDR that the ladders and platforms are not 'Capital Goods'. In the case of CCE v. Kothari Sugar Chemicals Ltd. - 2003 (55) RLT 453 (CESTAT), it has been held that operating platforms are integral to the plant. Hence, they are capital goods. Hence we feel that the items at Sl. No. 6, are also entitled for Modvat credit as capital goods. As regards the items at Sl.. No. 7, Transformer, in the case of Manikgarh Cement v. CCE - 2001 (136) E.L.T. 1085, the Tribunal has held that Transformers are 'Capital Goods'. By following ratio of the Jawahar Mills case, we allow Modvat credit for the items at Sl.. No. 8, Spring Hanger S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... underground tunnels for housing heavy duty electrical cables and also for supply of chilled water, distilled water, gas, through pipes, etc. and also used for making trenches for housing light duty electrical and networking cables in the factory and hydraulic pipes for the entire plant and also used for making cellars beneath the floor for installing various utility services needed for operation of machine, machinery and plant and also used for constructing supporting structures for machine, machinery, plants and various mills in the factory. 5.4 When the aforesaid usage, as shown during the factory visit of the Bench with representatives from both sides, is considered, there is no reason to deny credit when Commissioner allows credit on other structural items holding them to be component parts of capital goods. 9. It is also seen that all the above decisions squarely cover the issue in favour of the appellant. We find that this issue was agitated before the Hon'ble High Court of Rajasthan in the case of Aditya Cement (cited supra), wherein their lordship held as under: 11. We are of the opinion that answer to this question is no more res integra. The Hon'ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the manufacture of final product and the only requirement is that the same should be used in the factory of the manufacturer. Thus, it can be seen that the language used in the explanation is very liberal. 13. The Hon'ble Supreme Court has yet another occasion to consider the object and purpose of expression "used in manufacture of final product" in Indian Farmers Fertilisers Co-operative Ltd. v. Collector of Central Excise, Ahmedabad - 1996 (86) E.L.T. 177 (S.C.) = (1996) 5 SCC 488. The Hon'ble Supreme Court in the said case considered the case of ammonia used in the manufacture of fertilizer at distance from site of manufacturing urea to be later on used in the manufacture of Urea and the effluents treatment plant which was not directly connected with the manufacture of final product. The claim of the assessee on both counts was denied on the very same ground that the place where capital goods were used and treatment plant were not directly involved in the manufacturing of final product and were neither components and ancillary part of the plant and machinery. This view was negatived by the Supreme Court explaining that expression "used in the manufacturing of" does not n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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