M/S Aarti Industries Ltd vs Commissioner, Central Excise & Service ...

Appeal No.E/690/2012 [Arising out of OIA No.CS/49/SURAT-II/2012, dt.30.05.2012, passed by Commissioner (Appeals), Central Excise & Customs, Surat II]

M/s Aarti Industries Ltd. Appellant

Vs

Commissioner, Central Excise & Service Tax, Surat-II Respondent

Represented by:

For Appellant: Shri Jagdish Surti, Advocate For Respondent: Shri G. Jha, Authorised Representative

For approval and signature:

Honble Mr. H.K. Thakur, Member (Technical)

1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of Seen the order?

4. Whether order is to be circulated to the Departmental Yes authorities?

CORAM:

HONBLE MR. H.K. THAKUR, MEMBER (TECHNICAL)

Date of Hearing/Decision:09.06.2015

Order No. A/10776 / 2015, dt.09.06.2015

Per: H.K. Thakur

This appeal has been filed by the Appellant with respect to the OIA No.CS/49/SURAT-II/2012, dt.30.05.2012 passed by the First Appellate Authority, under which the OIO No.dt.14.06.2011 passed by the Adjudicating authority has been upheld. Shri Jagdish Surti, learned Advocate appearing on behalf of the Appellant argued that the issue involved in the present appeal is admissibility of CENVAT Credit on certain items like S.S. Sheets, Plates, Joists, Channels, Coils, M.S. Angles, H.R. Coils, M.S. Plates, Flanges etc, used in the fabrication of storage tank and support structures of the storage tanks. It was his case that majority of the items are used in the fabrication of storage tank from the above mentioned raw materials and became admissible as inputs as per the definition given under Rule 2(k) of CENVAT Credit Rules, 2004. He also relied upon the case law of CCE Visakhapatnam-II Vs A.P.P. Mills Ltd [2013 (29) ELT 585 (Tri-Bang)]. It was his case that as per Para 4.2 of this case law, CESTAT Bangalore has distinguished the judgment of Vandana Global Ltd Vs CCE Raipur [2010 (253) ELT 440 (Tri-LB) in the light of law laid down by Honble Supreme Court in the case of Commissioner Vs Rajasthan Spinning & Weaving Mills Ltd [2010 (255) ELT 481 (SC)]. Learned Advocate also argued that the amendment carried out in Rule 2(k) of CENVAT Credit Rules 2004, effective from 07.07.2009, is not retrospective as held by Hon'ble Gujarat High Court in the case of Mundra Port & Special Economic Zone Ltd Vs CCE & C [2015-TIOL-1288-High Court-AHM-ST]. The learned Advocate further argued that the entire demand pertains to the period 2005-2009 and the show cause notice was issued after a period of one year on 03.06.2010 and is clearly time barred because of the law settled only by the Larger Bench decision in the case of Vandana Global Ltd Vs CCE Raipur delivered in 2010. It was his case that the issue involved was debatable and got settled by the Larger Bench, therefore, extended period is not invokable. He relied upon the case law of Megafine Pharma Ltd Vs CCE & ST, Daman [2014-TIOL-1312-CESTAT-AHM].

2. Shri G. Jha, Authorised Representative appearing on behalf of the Revenue argued that the CENVAT Credit on S.S. Sheets, Plates, Joists, Channels, Coils, M.S. Angles, H.R. Coils, M.S. Plates, Flanges etc, is not admissible as the same were used in the making of support structures meant for machinery. On the issue of time bar, he relied upon the case law of CESTAT Delhi in the case of Lakhan Singh & Co Vs CCE Jaipur [ST/A/58310-58311/2013-CU(DB), dt.15.10.2013] to argue that the extended period will be applicable in this case as the applicability of extended period has to be seen with respect to the facts of each case.

3. Heard both the sides and perused the case records. In the present appeal, the Appellant availed CENVAT Credit of Rs.15,48,118.00 on the items like S.S. Sheets, Plates, Joists, Channels, Coils, M.S. Angles, H.R. Coils, M.S. Plates, Flanges etc as capital goods. These items were used in the manufacture of storage tank and its support structures. The issue of admissibility of these items to CENVAT Credit was under dispute and different opinions on the admissibility of CENVAT Credit on such items were available on the issue. The issue was finally resolved by the Larger Bench in the case of Vandana Global Ltd Vs CCE Raipur (supra). Under this case law, published in 2010, it was held that the CENVAT Credit on inputs used in the making of support structures for capital goods is not admissible. As the issue of admissibility of CENVAT Credit on these items in the manufacture in the present proceedings was disputable and different opinions were given by CESTAT and Courts, extended period of limitation for demanding duty is not applicable. Appellant has correctly relied upon the judgment of Megafine Pharma Ltd Vs CCE & ST, Daman (supra) to argue that the extended period is not invokable. In this regard, Para 4 of this case law relied upon by the Appellant is reproduced below:-

4. Heard both sides and perused the case records. It is observed from the annexure to the show cause notice dt. 23.12.2009 that the demand period is from June 2006 to April 2008 and the issue involved is admissibility of Cenvat Credit on doors, false ceiling, compactor for document keeping, sheets for roofing, flooring for finished goods storage area, tube light fittings, etc. Appellant claimed the credit of these items as capital goods under Rule 2 (a)(A) of the Cenvat Credit Rules, 2004. The issue of admissibility of Cenvat Credit on certain items and support structures was the subject matter of litigations between the manufacturers and the department. Conflicting views were being expressed by various courts as claimed by the appellant before the first appellate authority. The issue on admissibility of such items was finally decided by the Larger Bench in the case of M/s. Vandana Global Limited Vs. CCE, Raipur (supra). In the realm of conflicting interpretations given by various benches of CESTAT and other courts, it cannot be held that there was any suppression / misstatement on the part of the appellant with intention to evade any duty. In the facts and circumstances of the present appeal, extended period cannot be invoked. Without going into the merits of the case, the appeal of the appellant is required to be allowed on time bar alone as demand show cause notice had been issued beyond the period of one year from the date of taking Cenvat Credit.

4. In view of the above observation, the extended period cannot be invoked in situations for an earlier period where a part of dispute is subsequently decided by the Larger Bench of the CESTAT. The very fact that the issue is decided in 2010 by Larger Bench in the case of Vandana Global Ltd Vs CCE Raipur (supra) clearly convey that there was a confusion in the mind of the manufacturers regarding the admissibility of CENVAT Credit on disputed items.

5. In view of the above factual matrix, it cannot be held that the Appellant had any intention to evade payment of duty and accordingly, the extended period is not invokable.

6. In the present appeal, the period of demand is from 2005 to 2009 and the show cause notice was issued on 03.06.2010. The appeal filed by the Appellant is, therefore, required to be allowed on time bar. This Bench is not expressing any view on the merits of the case as on time bar, the appeal is required to be allowed.

7. In view of the above observations, the appeal filed by the Appellant is allowed.

(Dictated and pronounced in Court)

(H.K. Thakur) Member (Technical)

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