M/S. Tata Motors Ltd vs Commr. Of Central Excise, Kolkata-Iv

(Arising out of the Order-in-Original No.9/Commissioner/CE/Kol-IV/2011 Dated-05/07/2011 passed by the Commissioner of Central Excise, Kolkata-IV)

For approval and signature of:

DR.D.M. MISRA, HONBLE JUDICIAL MEMBER DR. I.P. LAL, HONBLE TECHNICAL MEMBER

M/s. Tata Motors Ltd. ` APPELLANT(S) VERSUS Commr. of Central Excise, Kolkata-IV RESPONDENT(S)

APPEARANCE

Sri R. Raghavan, Advocate & Sri H. Shukla, C.A.

FOR APPELLANT(S) Sri A.K. Das, Special CounseL (A.R.) FOR THE RESPONDENT(S)

CORAM: DR.D.M. MISRA, HONBLE JUDICIAL MEMBER DR. I.P. LAL, HONBLE TECHNICAL MEMBER

DATE OF HEARING & DECISION : 9/6/2015

ORDER NO.FO/A/75365/15

Per DR. I.P. LAL The instant appeal is filed against the order dated 5/7/2011 passed by the Commissioner of Central Excise, Kolkata-IV wherebyhe confirmed the demand of Rs.2,14,05,610.20 and Rs.29,00,,15, 241.49 alongwith the interest at the appropriate rate and impositio0n of equal amount of penalty on the appellant. 2.1 Brief facts of the case are that the appellant had applied for Central Excise Registration on 21/08/2007 for manufacturing excisable goods, namely- motor cars, engine and motor vehicle parts falling under Chapter Heading 87.03, 84.07/84.08 and 87.08 respectively of the first schedule to the Central Excise Tariff Act, 1985 and the Central Excise registration was granted by the Central Excise authority for the said purpose. 2.2 They took the credit of Rs.2,14,05610.20 during the period 2007 -2008 to 2009-2010 on flat roll non corrugated products coated with zinc, strips of thickness 4.75 mm or more, towers other than for transmission line, other articles of iron and steel and structures and super structures for Mining etc. falling under Chapter Heading 72 and 73 treating the said items as capital goods.

They further took the credit of Rs.29,00,15,241.49 against the input service distributors (ISD) invoices dated 15/09/2009 and 15/05/2010. 2.3 A show cause notice dated 3/12/2010 was issued to the appellant i.e. M/s. Tata Motors Ltd., Singur alleging that they had irregularly taken the credit on various items of Chapter 72 and 73 in the guise of capital goods.It is alleged that the impugned items were the structural materials of iron and steel and used for construction of flooring (mezzanine)structures in their work shop. They being embedded to earth are in the nature of immovable property and not excisable goods. They are also not the capital goods. In respect of credit taken on various input services, it is the allegation that the said assesse have not used the impugned services in or in relation to manufacture of finished goods as required under Rule 2(l) ibid and also the credit on the services was taken in the year 2009-2010, while as per statement dated 18/07/2009 of the Chairman of the Company M/s. Tata Motors available at page 6 of the Annual Report 2009 and the letter dated-3/3/2009 of the assesse submitted to the Range Officer, it appeared that the decision to dismantle the plant at Singur unit and its shifting to Gujarat was completed in the first half of the year 2009 or before.

It appeared from these facts that it was in the knowledge of the appellant that they would not use the impugned input services at their Singur unit. 2.4 Adjudication of the impugned show cause notice culminated in passing the above order. Being aggrieved the appeal is filed before this Forum. 3.1 Ld. Advocate for the appellant submitted that the appellant has used the various items falling under Chapter 72 and 73.for creating supporting structures and foundation of the main paint shop. Once this is done, the structures become part of the plant and machine of the main paint shop and used in or in relation to manufacture of final product. Hence, supporting structures should be treated as integral part of the capital goods. The Ld. Advocate submits that there is no restriction in Rule 2(k) for the availment of credit of duty paid goods for the manufacture of capital goods. He, further submitted that the entire demand is time barred, in as much as during the relevant period there was conflicting views of the various Tribunal and the eligibility of credit or other wise has been decided only by the Larger Bench of the Tribunal in the case of Vandana Globals case which has been relied upon in the impugned order.

3.2 As regards irregular availment of credit of Service Tax on various services used in Singur, it is the contention that the said credit was taken against the two ISD invoices dated 15/09/2009 and 15/5/2010.But, the impugned services were received and consumed prior to the decision taken to shift the operations to Sanand in Gujrat. He submits that in fact the appellant has already manufactured four complete engines as well as 15 cylinder heads in Singur plant before the company took the pull out decision due to continued agitation and public unrest in Singur. The Appellant had also taken trial runs for other manufacture of the motor vehicles in this unit. Accordingly, the credit against the ISD invoices is taken correctly by the appellant. 4.1. Ld. Special Counsel for Revenue submitted that the various items of iron and steel cannot be treated as capital goods in terms of the definition given under Rule 2 (a) of the CENVAT Credit Rules, 2004. However, they may be inputs in terms of the then explanation to the definition of inputs under Rule 2 (a) of the said rules, being the raw materials for making capital goods to be used in the factory of manufacturer.

He submitted that these items are generally used for construction purposes and the Ld. Commissioner in para 4.3 of the order has arrived on the conclusion that the said items were found to have been used for construction of flooring (mezzanine) structures in their work shop. They are embedded to earth and thus are in the nature of immovable property and are not excisable goods., In the instant case, the appellant is not eligible for CENVAT Credit in terms of the judgment in the case of Vandana Global Ltd. Vs. C.C.E. reported in 2010 (253) ELT 440 (Tribunal-LB). 4.2 On the issue of credit taken on input services he submitted that in the impugned proceedings, the authenticity of the invoices has not been called into question, nor has any element of credit constituting the ISD invoice has been disputed. However, the adjudicating officer in para 4.12 of the order observed that the appellant having already informed before taking credit that they were going to wind up their Singur factory, there would be no scope for them to show the use of credit. Accordingly, he has denied the credit. The Ld.

Special Counsel reiterated the observation/reasoning of the adjudicating authority in this regard. 5. Heard both the sides and perused the records. 6.1 We find that according to appellant various items of iron & steel were used for manufacture of supporing structures and foundation of the main paint shops. The main machines are rested on these structures in different floor without which the processes in the machines cannot function. On the other hand, it is the Revenues contention that the impugned items were used for the flooring purposes only. On perusal of the order passed by the Ld. Commissioner, we find that there is no definite finding on this issue. we are, therefore, of the opinion that this issue requires the verification by the adjudicating authority. Therefore, we remit this issue to the Ld. Commissioner due verification and to pass a fresh order. While passing the order he shall also examine the issue of limitation. 6.2 As regards the credit taken on input services, we find that the relevant provisions of CENVAT Credit Rules, 2004 read as under:- Rule 2(1) input service means any service,-/ (i) (ii) used by the manufacturer, whether directly or indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal,and includes services used in relation to setting of, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal; Rule 3. CENVAT Credit  (1) A manufacture or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of  -

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(ix) The service tax leviable under section 66 of the Finance Act paid on 

(i) -

(ii) any input service received by the manufacturer of final product or by the provider of output service on or after the 10th day of September, 2004.

6.3 It is evident from the above provisions that a manufacturer of the final product is allowed to take credit of service tax in respect of input services received by him for use in or in relation to manufacture of the final product including the services used in relation to setting up of the plant. It is not in dispute that M/s. Tata Motors received the impugned services for the aforesaid purpose. Moreover, it is the submission of the Ld. Advocate that the impugned services were consumed during the year 2007 i.e. prior to the dismantling of the plant at Singur in the year 2007 and for which credit was distributed to them by the ISD in the year 2009 and 2010.The Ld. Advocate has further pleaded that during the relevant period, they had already manufactured four complete engines as well as 15 cylinder heads in Singur plant before the company took the pull out decision due to continued agitation and unrest.

6.4 We find that the above contention of the appellant has not been controverted by the Revenue.Further, during the relevant period, the CENVAT Credit Rules did not preclude a manufacturer to take the credit at a later date in respect of the impugned services already received by them. Revenues sole ground for denying the credit is that the appellant could not have utilized the impugned services for manufacture of the final product (as they dismantled their plant at Singur). We are of the opinion that as the input services were received by M/s. Tata Motors at Singur for manufacture of the final products, the said unit is eligible to take credit in terms of Rule 3 of CENVAT Credit Rules, 2004 read with Rule 2 (l) of the said Rules .

7. In view of the above facts and circumstances of the case, we hold that M/s. Tata Motors, Singur has taken the CENVAT Credit correctly on the input services. We, however, remit back the case to the Ld. Commissioner for deciding the case afresh on eligibility of the credit taken on various items of iron and steel products on the basis of evidences on record and that would be produced by the Appellant during the course of de novo proceeding. He is directed to examine the issue of limitation as well. It is needless to mention that reasonable opportunity of hearing shall be granted to the appellant before deciding the case.

8. Consequently, the appeal is disposed as above.

(Operative part of the order pronounced in the Court) Sd/- 13/07/2015 Sd/- 13/07/2015 (D.M. MISRA) ( I.P. LAL) JUDICIAL MEMBER TECHNICAL MEMBER

k.b/-

Excise Appeal No. 855/2011

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