M/S. Jindal Steel & Power Ltd vs Commissioner Of Central Excise

[Arising out of Order-in-Appeal No. 106/RPR-I/2006 dated 15.6.2006 passed by the Commissioner of Central Excise (Appeals I), Raipur (CG)]

For approval and signature:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble 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 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. Jindal Steel & Power Ltd. Appellants

Vs.

Commissioner of Central Excise Respondent

Raipur (CG)

Appearance:

Shri L P Asthana, Advocate for the Appellants

Shri R K Grover, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Mr. B Ravichandran, Member (Technical)

Date of Hearing /decision: 09.09.2015

FINAL ORDER NO. 52994 /2015-EX(DB)

Per B Ravichandran:

The appellants are in appeal against the denial of Cenvat Credit on various items used by them in their factory.

2. The brief facts of the case are that the appellants availed cenvat credit on Hot Metal Transport vehicle, jumbo electric platform truck trailer assembly for oil storage tank and ladle transfer car. These credits were denied by lower authorities on the ground that these items are not capital goods, as they are vehicles and they are also not any inputs. Learned Commissioner (Appeals) concluded that on harmonious reading of both the definitions of inputs as well as that of capital goods, the goods which are used for transportation of material would not get covered for credit eligibility. Aggrieved by the said order, the appellant is before us.

3. The appellant pleaded that they are an integrated steel plant equipped with rotary kiln, blast furnace, arc furnace, Central plant casting machines, rolling mills etc. The various equipments in their integral plant are linked and the whole plant and machinery collectively function for making final products. It is admitted by the department that the transfer car is used by them for transfer hot metal from mini blast furnace to steel melting shop and thereafter rolling mill where castings are manufactured. They pleaded that each one of the impugned goods are used within the factory of production in relation to manufacture of their final products directly or indirectly.

4. During the arguments the learned Counsel for the appellant explaining the role played by the impugned goods in the overall operation of their plant. The jumbo electric /battery operated platform truck is special kind of item to carry nitrogen cylinder to gas boosting station of hot blast furnace and the lime to pig casting machines and water treatment plant. Hot metal transport vehicle is not a vehicle running on the public road. The Hot metal produced in blast furnace is tapped and stored in ladle and carried to steel melting furnace with the help of specially designed vehicle on the rail. The trailer assembly for oil storage tank mounted on trolley on the wheels of trailer so that the tanks can be located to take out the used transformer oil for filtration. They are integrally connected to overall manufacture of excisable goods. The ladle transfer car is integral to steel plant melting process of iron and steel in electric arc furnace. The molten hot metal is tapped into the ladle which is placed on a car. The car travels on monorail and molten metal is again tapped into ladle refining furnace where alloys are mixed with the molten metal before sending for casting. He further relied on Tribunals decision in the case of Tata Steel Ltd. [2012 (282) ELT 459 (Tri-Kolkata)] and Bhusan Steel Ltd. [2012 (286) ELT 745 (Tri-Kol) and Honble Apex Court decision in the case of Rajasthan State Chemical Works [1991 (55) ELT 444 (SC)] .

5. Learned AR on the other hand, reiterated the finding of the lower authorities and stated that the impugned goods are neither the capital goods nor inputs to be eligible for cenvat credit.

6. Heard both sides and examined the appeal records. The appellants eligibility for cenvat credit on the 4 main items are to be decided. The nature of usage of these items are not in dispute. The departments contention is that goods classified in Chapter 87 cannot be considered as eligible capital goods for credit purpose.

7. We find that jumbo electric /battery operated platform truck, hot metal transport vehicle, trailer assembly and ladle transfer car are specially designed for operational use inside the appellants factory. These items are part of overall machinery system critically contributing to manufacture of final product.

8. They are not transfer vehicles or trucks for common public transport of goods. As admitted in the proceedings, they are specially designed for industrial purpose and the operate within narrow scope of factory premises. In the case of Bhusan Steel Ltd. (supra), this Tribunal held that diesel locomotive torpedo ladle car carrying molten metal not only enhances the effectiveness, but without it the handling and in turn production of finished goods would not be possible. The Tribunal upheld the lower authoritys order holding that diesel locomotive as accessory of capital goods.

9. In the case of Tata Steels Ltd.(supra), the Tribunal held that coke transfer car is used as material handling equipment and without that coke could not be transferred from oven to furnace, accordingly, eligible for credit. The Tribunal relied on Larger Bench decision in the case of Banco Products (India) Ltd. [2009 (235) ELT 636(Tri-LB)]. The Larger Bench of this Tribunal held that machines used for delivery of raw material in time or increasing the effective working of the same and even removal of finished goods contribute to manufacture of finished goods.

10. This should be viewed in the light of interpretation of the term accessory by various Courts. The Honble Supreme Court in the case of Rajasthan State Chemical Works (supra) held that transfer of raw material to the reacting vessel is a part of continuous process but for which manufacture would be impossible. The handling of the raw material for such transfer is integrally connected with the process of manufacture.

11. Considering the above discussions, and after carefully examining the nature of impugned goods, we find that that all these equipments are correctly be considered as accessories to various capital goods involved in the manufacture of final products as they are integrally connected in the process of manufacture. Accordingly, we hold that the denial of cenvat credit for these items is not sustainable and allow the appeal with consequential relief.

( operative part of the order pronounced in the open court )

( Ashok Jindal ) Member(Judicial)

( B Ravichandran )

Member(Technical)

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