M/S. Govind Nagar Sugar Ltd vs Commissioner Of Central Excise

[Arising out of Order-In-Appeal No. 97-CE/ALD/2010 dated 31/03/2010 passed by Commissioner of Customs & Central Excise (Appeals), Allahabad ]

For approval and signature:

Honble Mr Ashok Jindal, Member (Judicial)

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 should 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 Departmental authorities?

M/s. Govind Nagar Sugar Ltd. Appellants

Vs.

Commissioner of Central Excise Respondent

Allahabad

Appearance:

Shri P K Mittal, Advocate for the Appellants

Ms. Ranjana Jha, AR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing : 18.06.2015

Date of decision : 09.07.2015

ORDER NO. FO/52259/2015-Ex(SM)

Per Ashok Jindal :

The appellant is in appeal against the impugned order denying Cenvat credit on various items like MS sheets, plates,joist, channel etc. used for the purpose of manufacture / installation of molasses tanks, boiler etc.

2. The facts of the case are that the appellant is manufacturer of sugar and molasses and they have procured items like MS sheets, plates, joist, angles, channels etc., which were used for manufacture/ installation of molasses tanks / boilers. The adjudicating authority denied the cenvat credit to the appellant on the premise that cenvat credit is not admissible on these items as these are neither capital goods nor inputs therefore cenvat credit is not entitled. Aggrieved from the said order, appellant is in appeal against the impugned order.

3. Learned Counsel for the appellant submits that the appellant has procured these steel items which have been used for making / fabrication of structural supports of various machinery, namely, cane carrier, juice heater, evaporator, pan station, centrifuging machine, juice clarifier, sugar grader of Drier House, etc. and these are the capital goods which been further used in manufacturing of sugar and molasses. Therefore, the are used in or in relation to manufacture of final product therefore they are entitled to take cenvat credit. To support this contention, he relied on the decision of Madras Aluminium Co. [2010 (259) ELT 738 (Tri-Chen)]; Jindal Steel and Power Ltd. [2011(263)ELT 557 (Tri-Delhi); and Lloyds Metals& Engg. Ltd. [2014 (309) ELT 533 (Tri-Mumbai)]. He also relied on the decision of Basti Sugar Mills Co. Ltd. Final Order No.A/51593-51594/2015 dated 7.5.2015. He further submits that CBEC Circular issued vide NO.276/110/96 TRU dated 2.12.1996 and Circular No. 964/7/2012 CE dated 2.2.2004 wherein the CBEC has clarified that those structural components which are to be used essentially as a part of Boiler system would be classified as parts of Boiler only and these structurals components are nothing but the parts and accessories of the Boiler and are entitled for cenvat credit.

4. On the other hand, learned AR opposed the contention of the learned Counsel and heavily relied on the decision of Vandana Global Ltd. vs. CCE, Raipur [2010 (253) ELT 440 (Tri-LB)]. She also relied on the decision of Apex Court decision in the case of Saraswati Sugar Mills vs. CCE, Delhi III [2011 (270) ELT 465 (SC)] and Bharti Airtel Ltd. [2014-TIOL-1452-HC-MUM-ST].

5. Heard the parties. Considered the submissions.

6. The facts in this case are that steel items used by the appellants for fabrication of cane carrier juice clarifier house, molasses storage tanks, evaporator, Pan station machine, sugar grinder etc. All these items are the capital goods of sugar factory. These facts are not in dispute. The facts of the Vandana Global Ltd. are not applicable to the facts of present case as in that case, the supporting structurals which are embedded to earth were held as immovable assets and not entitled to take cenvat credit. In this case, the structurals are components and accessories of capital goods. Further in the case of Saraswati Sugar Mills ( supra), the Honble Apex Court held that the inputs of the goods are somehow different as in that case iron and steel items were used for installation of the machinery like cane milling plant, clarification plant, evaporator and pan boiling plant etc. In that case, these items were used for supporting structurals which were embedded to earth but in this case, these items were used by the appellant for fabrication of these items, i.e. the capital goods. Therefore, facts are totally different.

7. Learned AR also relied upon the decision of Bharti Airtel Ltd. (supra) to say that appellant is not entitled to avail Cenvat credit on the supporting structurals which were embedded to earth. Infact said facts are not applicable to the facts of this case. In this case, steel items are used for fabrication of capital goods. Therefore, the facts are different from the facts of Bharti Airtel Ltd.(supra). Moreover, in the case of Mundra Ports & Special Economic Zone Ltd. vs. CCE [2015-TIOL-1288-HC-AMD-ST], the Honble High Court has held that the decision of Vandana Global Ltd. of Larger Bench of this Tribunal is not correct wherein the Honble High Court has observed that, We have carefully gone through the decision of the Larger Bench of the Tribunal. We do not find that amendment made in the Cenvat Credit Rules, 2004 which come into force on 7.7,2009 was clarificatory amendment as there is nothing to suggest in the Amending Act that amendment made in Explanation 2 was clarificatory in nature. It was further held that even if the new provision is added then it will be new amendment and cannot be treated to be clarification of particular thing or goods and / or input and as such the amendment could operate only prospectively.

8. I further find that in the case of Basti Sugar Mills Ltd. (supra), this Tribunal has observe as under:

3. Learned Counsel for the appellant submits that these items have been used for supporting structure of the boilers and fabrication of storage tank, sugar grader which are integral part of the capital goods. Therefore, they are entitled to take cenvat credit on these items. For availing cenvat credit on supporting structures of the boilers, he relied on the CBECs circular No.964/07/2012-Cx dt.2.4.2012. He fairly submits that MS plate has been used for fabrication of structural supports which were further used in mill house where credit is only Rs.6,921/-. For that, he submits that he is not contesting the same.

9. Further I find that these items are used for fabrication of capital goods, namely, shape and sections, plates, hot strips, PMP Plate, Angles, and Channels, Hot Strip Mill Plate, Joints Skelp etc.

10. Therefore, I hold that appellant is entitled to take Cenvat credit on these inputs as inputs of capital goods. Same has taken the support of CBEC Circular No. 964/07/2012 CX dated 2.4.2012. In these terms, I hold that appellant is entitled to take Cenvat Credit on the items in question. Consequently, appellant is not required to reverse the cenvat credit. In these terms, I set aside the impugned order and allow the appeal with consequential relief, if any.

(Pronounced in the open court on 09.07.2015)

( Ashok Jindal ) Member(Judicial)

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