Cce, Raipur vs M/S Jindal Steels & Power Ltd

[Arising out of the Order-in-Appeal No. 133-134/RPR-I/2005 dated 09/11/2005 passed by The Commissioner (Appeals-I), Customs & Central Excise, Raipur.]

For Approval and signature :

Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

1. Whether Press Reporters may be allowed to see :

the Order for publication as per Rule 27 of the

CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of :

the CESTAT (Procedure) Rules, 1982 for

publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair :

copy of the order?

4. Whether order is to be circulated to the :

Department Authorities?

CCE, Raipur Appellant

Versus

M/s Jindal Steels & Power Ltd. Respondent

Appearance

Shri Ranjan Khanna, Authorized Representative (DR)  for the appellant.

Shri L.P. Asthana, Advocate  for the Respondent.

CORAM: Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

Final Order No. 52579-52580/2015 Dated : 10/08/2015

Per. B. Ravichandran :-

This is an appeal by the Revenue against the order of learned Commissioner (Appeals). The facts of the case are that the respondent are engaged in the manufacture of Sponge Iron and Iron Steel products. They are availing Cenvat credit on capital goods when they undertook expansion of existing plant and installed a Mini Blast Furnace, Rolling Mill and Steel Melting Shop II. In this connection, they procured MS Rails, Crane Rails, CR Sheets, MS Rounds etc. and availed credit during October to December 2001. They fabricated/manufactured various goods like Column, Crane Rails, Feeder Frame for Coal, Chimneys and Flue Duct etc. at site using various capital goods and claimed the exemption under Notification No. 67/1995-CE dated 16/03/1995.

2. On Scrutiny of their claim the Department initiated action to deny the said exemption. The case was adjudicated by the Original Authority who allowed the benefit of the said exemption thereby allowed the Cenvat credit of Rs. 40,90,205/- and confirmed the demand of Rs. 75,983/- towards the Cenvat credit availed by the respondent on certain specific items like column for floor platform and bottom ash hopper roof. The Department filed appeal and the learned Commissioner (Appeals) vide the impugned order upheld the order of the Original Authority and rejected the Revenues appeals. Aggrieved by the said order, the Revenue is before us.

3. In the appeal it is contended that the impugned goods viz. Crane Girder, Crane Auxiliary Girder, Base Frame for Pump, Crane Rail, Crane Surge Girder, Air Pre-heater Frame, SH Casing Frame, Coal Feeder Frame, Deserter Drum, Base Frame, ID Fan Base Frame, Base Frame of Ash Dryer, Silo Pump Foundation cannot be held as capital goods in term of Rule 2 (b) of the Cenvat Credit Rules as the impugned goods do not fall under Chapter 82, 84, 85, 90 or heading 68 of the Central Excise Tariff Act, 1985. The impugned goods viz. Crane Girder, Crane Column, Crane Auxiliary Girder are only a supporting structure for providing support to EOT Crane. They do not play any role in the functioning of the machinery of which they had claimed to be parts by the Respondent.

4. Reliance was placed on this Tribunals order in the case of CCE, Indore vs. L.G. Hotline CPT Ltd. reported in 2004 (176) E.L.T. 443 (Tri.  Del.). It has been contended that the impugned goods are neither inputs used in or in relation to the manufacture of final products nor are they capital goods. Therefore, the exemption contained in the Notification No. 67/1995-CE is not admissible. During the course of argument the learned AR reiterating the grounds of appeal. The learned Counsel for the respondent submitted that both the lower Authorities have examined in detail itemwise, the nature of items, their function and their individual eligibility. After such examination they have concluded that the impugned items have been manufactured by them as per specific design and requirement for use in/with the respective machines and have also been accordingly specifically designed to suit the requirement of the said machines. It has been categorically concluded by them that these goods are therefore parts/ components/accessories of this specific machineries/plant. The findings are that they do not by any stretch of imagination can be termed as parts of general use and are to be considered only alongwith specific machines. Hence, he pleaded that the appeals by the Revenue are without merit.

5. Heard both the sides and examined appeal records. The Revenue appeal is on the short point that the steel structures which are emerging are not capital goods. They are either support structures or platforms, frames, foundations, and parts of civil structure not covered by the category of capital goods. In this regard, we find that learned Commissioner (Appeals) in para 8.5 of the impugned order examined the nature and functions of each one of the impugned items specifically with reference to the scope of capital goods as per Rule 2 of Cenvat Credit Rules and came to the conclusion that these impugned goods can be classified into three groups namely the first group consists of Crane Girder & Crane Rail, Crane Column, Crane Surge Girder and Crane Auxiliary Girder. The uses of these goods in the respondent factory are that Crane Girder and Crane Rail are provided to hold the crane rails in position so that overhead crane is able to move at a required height. Crane rails are used for long travel of EOT crane; Crane Columns function to transfer the handled load to the ground when overhead crane is working by combined action of axial force and bending moment.

Crane Surge Girder & Crane Auxiliary Girder are used to hold crane girder in position properly while crane is working. In view of their use, all these goods are essential accessories for EOT crane installed in respondents factory as EOT crane cannot perform without them. The second group includes Base Frames for various machines/machineries such as Air Pre-heater, SH Casing, Coal Feeder, Deacrator Drum, ID Fan, Motor, Ash Dryer/Pump, (Ash Dyke Motor and Pump) and Silo Pump. All these Base Frames are fabricated/manufactured according to specific design and drawing for specific requirement and on which various machines/machinery of the plant are installed for achieving required rigidity and vibration free function. These Base Frames are not performing any individual function as a machine and machinery but they are essentially required to be installed alongwith machines and machinery for the beneficial enjoyment. No heavy machine/machinery can be installed without base frames. Therefore in my opinion, all these frames are essential accessory of that machine with which it is installed.

The third group is consist of chimney and flue duct. Chimney is used for emission of fumes and gases and flue duct is used for holding transferring gases for their emission through chimney. They are essential accessories in the respondent plant. Therefore, all the impugned goods as mentioned above are covered in the scope of term accessories in the definition of capital goods at clause (ii) of Rule 2 (b) of the Cenvat Rules because they are specifically designed, fabricated/manufactured as per specific technical requirements and they are technological necessity of the plant for the manufacture of Iron and steel products in respondents factory and they are essentially required for running the plant and machinery. Since no evidence has been adduced to establish that these goods have not been used in the factory of manufacturer and therefore the respondent has complied with the condition of Rule 2 (b) of Cenvat Rules that such goods should be used in the factory of the manufacturer of final product.

6. The learned Commissioner (Appeals) further examined various case laws and finally arrived at the decision to uphold the original order. In the Revenues appeal nothing has been brought out to specifically controvert the above said findings of the learned Commissioner (Appeals). We find the reliance placed in appeal on this Tribunals order in CCE, Indore vs. L.G. Hotline CPT Ltd. (supra) is not correct in as much as it is not possible to compare Steel Support Structures of Conveyors to Crane Girder, Crane Column in as much as the later items are very much part or accessories necessary for functioning of the Crane. Mere allegation that impugned goods are used in foundation or construction platform is not sufficient to deny the benefit in view of specific and categorical findings of both the lower Authorities. We find no reason to interfere with the impugned order and accordingly dismiss the appeals filed by the Revenue.

(Operative part of the order pronounced in the open court.)

(Ashok Jindal)

Member (Judicial)

(B. Ravichandran)

Member (Technical)

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