M/S Patel Alloys Steel (P) Ltd vs Commissioner, Central Excise & Service ...

Appeal No.E/1404/2011 [Arising out of OIA No.112/2011(Ahd-I)CE/MM/Commr(A)/Ahd, dt.18.10.2011, passed by Commissioner (Appeals), Central Excise & Service Tax, Ahmedabad]

M/s Patel Alloys Steel (P) Ltd Appellant

Vs

Commissioner, Central Excise & Service Tax, Ahmedabad-I Respondent

Represented by:

For Appellant: Shri P.G. Mehta, Advocate For Respondent: Shri K. Sivakumar, Authorised Representative.

For approval and signature:

Honble Mr. P.K. Das, Member (Judicial)

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. P.K. DAS, MEMBER (JUDICIAL)

Date of Hearing/Decision:25.03.15

Order No. A/10275 / 2015, dt.25.03.2015

Per: P.K. Das

1. The appellants were engaged in the manufacture of Steel/SGI/CI Casting/Engineering items and Wind Mill parts falling under Chapter 73 & 84 of the Schedule to the Central Excise Tariff Act, 1985. During the period from 2003-04 to 2005-06, the appellants availed CENVAT Credit on the Channels, Beams, Angles, Bars etc. A show cause notice dt.16.04.2007 was issued, proposing to deny the CENVAT Credit alongwith interest and to impose penalty on the ground that these items were neither covered in the definition of Capital Goods nor covered under the category of Components, Spares and Accessories of the Capital Goods. The Adjudicating authority disallowed the CENVAT Credit of Rs.15,77,705.00 alongwith interest and also imposed penalty of equal amount of CENVAT Credit. Commissioner (Appeals) upheld the Adjudication order.

2. Learned Advocate appearing on behalf of the Appellant contested the demand on merit as well as on limitation. He submits that as per verification report of the Assistant Commissioner of Central Excise, Division-III, Ahmedabad-I, as reproduced in the impugned order, these items are in the nature of components of the machineries. He submits that the CENVAT Credit cannot be denied on the components of the machineries. He relied upon the decision of the Tribunal in the case of India Cements Ltd Vs Commissioner of Central Excise, Trichy - 2013 (296) ELT 513 (Tri-Che.). He also relied upon the decision of Honble Supreme Court in the case of Commissioner of Central Excise, Jaipur Vs Rajasthan Spinning & Weaving Mills Ltd - 2010 (255) ELT 481 (SC). It is submitted that the demand is barred by limitation as the Appellant disclosed the availment of credit in their statutory records, CENVAT account.

3. On the other hand, the learned Authorised Representative on behalf of the Revenue, reiterates the findings of the Commissioner (Appeals). He particularly drew the attention of the Bench to the relevant portion of the impugned order. He submits that there is a contradiction in the submission of assessee, as, on one hand, it is stated that moulding boxes etc are components and on the other hand, it is stated that these are vital parts and contributing to the efficiency and quality of the product.

4. After hearing both the sides and on perusal of the records, I find from the impugned order that the Assistant Commissioner of Central Excise, Division III, Ahmedabad-I, vide his letter dt.13.09.2011, has submitted detailed verification report. On perusal of the said report and the observations of Commissioner (Appeals), I find that these items were found to be used as components in the manufacture of Match Plates, Moulding Boxes, Sand Mixers, Conveyor and Furnaces. According to the Department, Match Plates, Moulding Boxes, Sand Mixers, Conveyor and Furnaces are supporting in the manufacture of castings. The appellant submitted a Chartered Engineers certificate dt.14.06.2011 stating that these items were used in the manufacture of accessories and components including moulding boxes for smooth running of the machinery. It is also stated that the actual manufacturing process is carried out by Match Plates, Moulding Boxes, Sand Mixers, Conveyor and Furnaces. It is apparent from the report and the certificate that these items were used as components of the machinery for manufacturing of casting.

5. Honble Supreme Court in the case of Rajasthan Spinning & Weaving Mills Ltd (supra) held that the Steel plates and M.S. channels used in the fabrication of chimney for diesel generating sets are admissible for CENVAT Credit. The Tribunal in the case of India Cements Ltd Vs Commissioner of Central Excise, Trichy (supra), following the decision of Honble Supreme Court in the case of Commissioner of Central Excise, Jaipur Vs Rajasthan Spinning & Weaving Mills Ltd (supra), held as under:-

7. In the present? case, it is seen that the items in question were used in the erection of various machineries such as, - new additional Electrostatic Precipitator for raw mill project, additional fly ash handling system, MMD crusher etc. for the Dry Process Cement Manufacturing Plant. It is evident that MS Angles, MS Beams, MS Channels etc. were used in the erection of machineries it become component of the same, which are integral part of Dry Process Cement Manufacturing Plant. It is noted that Fly Ash handling system is a pollution control equipment and particularly mentioned in 2(a)(A)(ii) of Rules, 2004. The allegation in the above show-cause notice that the Chapter Heading of these items were not covered under Rule 2(a) of the Rules, 2004, is not sustainable, in respect of pollution control equipments because the rule does not specify the tariff Headings under which pollution control equipment should be falling. The appellant established that these items were used for erection of capital goods namely Dry Process Cement Manufacturing Plant, which falls under Chapter 84, as mentioned in Serial No. (i) of Rules 2(a)(A). Thus, the items in question are covered in Serial No. (iii) of Rules 2(a)(A) of the Rules, CBEC has clarified that all parts, components, accessories which are to be used with capital goods in serial (i) and (ii) of Rules 2(a)(A) and classifiable under any chapter Heading are eligible for availment of Cenvat credit. A plain reading of serial (iii) cannot lead to a different conclusion either.

6. In the present case, it is clearly evident from the records that these items were used as components of Match Plates, Moulding Boxes, Sand Mixers, Conveyor and Furnaces used in the manufacture of final product casting. As the items are used as components, the Appellants are eligible to avail CENVAT Credit thereon.

7. In view of the above discussion, the impugned order is not sustainable. Accordingly, the impugned order is set aside. Appeal filed by the Appellant is allowed.

(Dictated & Pronounced in Court)

(P.K. Das) Member (Judicial)

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