M/S. Jsw Steel Coated Products Ltd vs Commissioner Of Central Excise, Nagpur

[Arising out of Order-in- Appeal No. NGP/EXCUS/000/APPL/061/14-15 dtd. 28/5/2014 passed by the Commissioner (Appeals), Central Excise & Customs, Nagpur]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

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1. Whether Press Reporters may be allowed to see : No 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 : seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities? =======================================================

M/s. JSW Steel Coated Products Ltd. : Appellants

VS

Commissioner of Central Excise, Nagpur : Respondent

Appearance

Shri. Vipin Kumar Jain, Advocate with Shri. Vishal Agarwal, Advocate for the Appellants Shri. Sanjay Hasija, Superintendent for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 2/7/2015 Date of decision: /2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against Order-in- Appeal No. NGP/EXCUS/000/APPL/061/14-15 dtd. 28/5/2014 passed by the Commissioner (Appeals), Central Excise & Customs, Nagpur.

2. The fact of the case is that the appellant is engaged in manufacture of CR Sheet/Coils, Galvanized Sheets/ Coils and Colour Coated sheets falling under Chapter 72 of the first Schedule of the Central Excise Tariff Act, 1985 for which they are registered under Central Excise Act. They are also availing the Cenvat credit facility in respect of input/ capital goods and service tax under CCR, 2004. During the course of scrutiny of the records of the appellant the department observed that the appellant had taken Cenvat credit on HR plates /MS Plates/SS Plates/ CHEQ Plate falling under chapter 72 treating the same as capital goods. During the period from 1/9/2011 to 31/8/2012 the appellant have availed Cenvat credit amounting to Rs. 6,27,514/-. HR plates /MS Plates/SS Plates/ CHEQ Plate were used for various utility services needed for operation of machines for production. Show cause notice was issued proposing demand of Cenvat credit on the said goods amounting to Rs. 6,27,514/- alleging that capital goods on which appellant availed Cenvat credit as capital goods were mainly HR plates /MS Plates/SS Plates/ CHEQ Plate having separate and distinct identity, the same does not appear to be used in any part of machinery so as to be called capital goods which were used in the manufacture of final product moreover it appears that the same could not used independently as capital goods. Since these goods are falling under chapter 72 and are not components and spares and accessories of the goods specified at clause (i) and (ii) of Rule, 2 (a) of CCR, hence the goods falling under chapter 72 are not covered the ambit of definition of capital goods and credit so availed on such goods treating them as capital goods specified under the clause (a) of Rule 2 of Cenvat credit Rules, 2004 is inadmissible, irregular. The show cause notice also contended that these goods even could not be treated as input within the definition of input is specified under sub rule (k) of Rule 2 of CCR, 2004 for the reason that the same were not used for manufacture of their final product. The show cause notice was adjudicated wherein the Ld. Commissioner has passed following order.

19.1 I confirm the demand amounting to Rs. 6,27,514/-(BED Rs. 6,09,228/-+ Ed Cess Rs. 12,190/-+ SH Ed Cess Rs. 6,096/-) for the period from September 2011 to August 2012 under the Rule 14 of the Cenvat credit Rules, 2004 read with Section 11A(1) of the Central Excise Act, 1944.

19.2 I demand interest and order its recovery from the noticee at appropriate rates under rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AA of Central Excise Act, 1944.

19.3 I impose a penalty of Rs. 6,27,514/- on the noticee under rule 15(1) of the Cenvat Credit Rules, 2004.

19.4 I hold the goods HR plates /MS Plates/SS Plates/ CHEQ Plate on which the noticee availed irregular Cenvat credit, in the manner aforesaid, liable to confiscation under Rule 15(1) of the Cenvat credit Rules, 2002 and confiscate the same. In lieu of confiscation, I impose redemption fine of Rs. 10,00,000/- on noticee under Section 34 of the Central Excise Act, 1944.

19.5 I hold the finished goods C.R. Sheets/Coils, Galvanised Sheets/Coils and Colour Coated Sheets manufactured by the noticee and cleared by availing irregular Cenvat credit, in the manner aforesaid, liable to confiscation under Rule 25 of the Central excise Rules, 2004 and confiscate the same. In lieu of confiscation, I impose redemption fine of Rs. 10,00,000/- on noticee under Section 34 of the Central Excise Act, 1944.

19.6 I impose penalty of Rs. 6,27,514/- on the noticee under Rule 25 of the Central Excise Rules, 2002.

Aggrieved by the said order in original dated 14/10/2013 appellant filed appeal before the Commissioner(Appeals). Ld. Commissioner (Appeals) while disposing the appeal has reduced the demand of Rs. 5,94,800/-. Penalty was also restricted to Rs. 5,94,800/- imposed under Rule 25 of Central Excise Rules, 2002 was restricted to Rs. 94,734/- Aggrieved by the said impugned order, the appellant filed this appeal.

3. Shri. Vipin Jain, Advocate and Shri. Vishal Agarwal, Ld. Counsel for the appellant appearing on behalf of the appellant. Shri. Vipin Jain submits that period of credit involved is from 1/9/2011 to 31/8/2012 during which the credit on subject goods was governed by amendment definition of input provided under Clause (k) of Rule 2 of CCR, as amended by notification No. 3/2011 CE(N.T) dated 1/3/2011. In view of this amended definition the term such as in or in relation to the manufacture, directly or indirectly and contained in the finished goods or otherwise has been given away and the input means of goods used in the factory by the manufacture of the final product. In view of this amended definition of input of the goods irrespective whether the same is used in or in relation to the manufacture or otherwise credit shall be allowed so long it is used in the factory by the manufacturer. As regard the good in question there is no dispute that these goods were indeed used in the factory of the manufacturer. He further submits that exclusion was provided under sub clause (A) to (F) of clause (iv) of Clause (k) of Rule 2 of CCR according to which the input does not include goods used for construction of the building or civil structure or part thereof or laying foundation or making of structure for support of capital goods. It is his submission that the sale of goods were not used for construction of building or civil construction or part thereof or laying foundation or making of structure supporting capital goods the same does not follow under exclusion category provided in the definition of input, hence the credit is admissible. Ld. Counsel further submits that the goods in question were used for making platform, stairs etc. which were used for making of laborer during manufacture of final products. Therefore since the use of the goods other than exclusion provided in the definition and goods have been used in the factory of the manufacture, Cenvat credit is admissible.

4. On the other hand, Shri. Sanjay Hasija, Ld. Superintendent appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that from the order in original it is clear that goods such as HR plates /MS Plates/SS Plates/ CHEQ Plate etc. falling under chapter 72 have been used for making platform, ladders, base frame, ducting and drainages . therefore the goods have essentially used for making constructional for supporting of capital goods in the factory therefore it falls under exclusion category of the definition provided under exclusion clause (B) of the Definition of input therefore the credit is admissible.

5. I have carefully considered the submissions made by both sides and perused the record.

6. I find that lower authority have denied the Cenvat credit even not considering goods as input on the ground that goods have been used for making platform ladders, base print etc and concluded that these nothing but construction for capital goods. On the contrary Ld Counsel submits that all these items which were made out of the subject goods are not for construction of capital goods but it is for independent use of various operations by the laborers for their working during the production of goods. I observed that there is conflict between stand of the lower authority and the claim of the Ld. Counsel for the appellant regarding the nature of construction. I found that the fact of the actual use on this construction whether for capital goods or independent for other purpose has not been verified nor any evidence is available on record. I am of the view that if the construction like platform, ladders, base print etc are not purpose for support construction of any capital goods and if the same is used independently the goods used in making such items shall be eligible for Cenvat credit under input as per the definition of input service. However the fact of use of these items made out of subject goods ie.e HR plates /MS Plates/SS Plates/ CHEQ Plate has not been verified. I find it proper to remand the matter to the original adjudicating authority. I therefore remand the matter to the adjudicating authority with direction that to verify the items such as platform, ladder, base print made out of the subject steel items and whether the said items are used independently or as supporting structure of capital goods. If it is found that the such items are not use as construction of capital goods but used independently, credit on the goods i.e. HR plates /MS Plates/SS Plates/ CHEQ Plate shall be allowed. Needless to say that the appellant shall be given sufficient opportunity of personal hearing and also to submit necessary documents. The appeal is allowed by way of remand.

(Order pronounced in court on ______________)

Ramesh Nair Member (Judicial)

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8 E/88371/14