Madras Cements Ltd vs Commissioner Of Central Excise

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI

Appeal No.E/69/2004

[Arising out of Order-in-Appeal No.489/2003 (SCN)-TRY-II dt.16.10.2003 passed by the Commissioner of Customs & Central Excise (Appeals), Trichy]

Madras Cements Ltd. Appellant

Versus

Commissioner of Central Excise, Trichirapalli Respondent

Appearance:

Shri R. Parthasarathy, Consultant For the Appellant

Shri K.P.Muralidharan, AC (AR) For the Respondent

CORAM :

Honble Shri R. Periasami, Technical Member Honble Shri P.K. Choudhary, Judicial Member

Date of Hearing/Decision : 10.9.2015

FINAL ORDER No.41244/2015

Per R. Periasami

The appellant filed appeal against Order-in Appeal dt. 16.10.2003 passed by Commissioner of Central Excise (Appeals), Chennai.

2. The brief facts of the case relates to denial of modvat credit on various items under erstwhile Rule 57Q of Central Excise Rules where the adjudicating authority in his order dt. 27.6.2003 disallowed modvat credit of Rs.20,71,668/- in respect of capital goods and allowed modvat credit of Rs.1,35,25,398/- on various items. On appeal, the Commissioner (Appeals) partly allowed the appeal and upheld the OIO disallowing credit involving an amount of Rs.19,11,892/- in respect of the remaining items :-

1) Dumpers 98704.0) Rs.8,10,570/-

2) Hindustan Loaders (8429.00) Rs.6,55,000/-

3) Emitting Electrodes (7320.00) Rs. 61,200/-

4) Steel casing (7308.90) Rs. 3,822/- 5) Classifier Housing (8429.00) Rs. 83,828/- 6) Steel Structure Rs. 15,304/- 7) Steel Wire (7312.90) Rs.2,12,168/- ___________________ Total Rs.19,11,892/- ___________________ Hence the appellants filed the present appeal.

3. Ld. Consultant appearing for the appellant reiterates the grounds of appeal and submits that the period involved in this credit relates to April and May 1997. He submits that before filing of appeal before Tribunal, they have reversed credit of Rs.14,65,570/- on 26.2.98 as evident from Tribunal's stay order dt. 2.9.2004. He submits that major amount involved is in respect of items Dumpers and Loaders.

4. The Commissioner (Appeals) has disallowed credit on dumpers and loaders on the grounds that these are used in mines and mines are not part of the factory premises and also on the second ground that they are not capital goods classifiable under Rule 57Q. He submits that Hon'ble Supreme Court in the case of Vikram Cement Vs CCE Indore - 2006 (197) ELT 145 (SC) already settled the issue that all capital goods and other goods used by the appellant in their own captive mines are eligible for availing modvat credit. As an alternative plea, he submits that even if the dumpers and loaders are not considered as capital goods under Rule 57Q, they are eligible for credit under erstwhile Rule 57B of Central Excise Rues, 1944. He drew our attention to sub-rule (2) and clause (i) of Rule 57B and submits that the said rule clearly stipulates that machines which are not defined in Rule 57Q are eligible for credit under Rule 57E.

4.1 Regarding inputs, Emitting Electrodes classifiable under 7320.00, Steel Casing classifiable under 7308.90 and Classifier Housing classifiable under Heading 8429.00, he submits that all three items are parts of various machineries used in their plant. He submits that Emitting Electrodes are made up of steel and are used in Electrostatic Precipitator Classifier in Pollution Control Equipment. Steel casings are outer cover of process equipment like Bucket Elevators etc. Classifier Housing is used in vertical mill or cement mill. He submits that Commissioner (Appeals) has denied credit only on the ground that these are not parts of capital goods which are specified under Rule 5Q. He drew our attention to para-4 of Board's circular No.27/110/96-TRU dt. 2.12.96 wherein the Board has clarified that all parts, components, accessories which are to used with capital goods of clauses (a) to (c) of Explanation (1) of Rule 57Q and classifiable under any chapter heading are eligible for availment of modvat credit.

4.2 Regarding Steel Structures, these items are fabricated from structural steel and are part of lime stone stacker and reclaimer which are used for supporting the bins, equipments etc. They are eligible for credit under erstwhile Modvat Rules.

4.3 Regarding Steel wires, he submits that these are used for lifting and handling of heavy machineries inside the plant. The material is used in the material handling equipments like cranes etc. He relied on the following decisions :-

1) CCE Hyderabad Vs India Cements Ltd.

2005 (182) ELT 398 (Tri.-Bangalore)

2) CCE Hyderabad Vs India Cements Ltd.

2009 (238) ELT 193 (Tri.-Chennai)

3) CCE Trichy Vs India Cements Ltd.

2004 (175) ELT 476 (Tri.-Chennai)

4) CCE Meerut II Vs Kesar Enterprises Ltd.

2005 (183) ELT 399 (Tri.-Delhi)

5) CCE Trichy Vs India Cements Ltd.

2012 (285) ELT 341 (Mad.)

6) ACC Ltd. Vs CCE Bhopal 2005 (192) ELT 345 (Tri.-Delhi)

7) Global Sugar Ltd. Vs CCE Kanpur 2000 (119) ELT 611 (Tri.)

8) India Cements Ltd. Vs CCE Hyderabad 2005 (180) ELT 247 (Tri.-Bang.)

9) Texmaco Ltd. Vs CCE Hyderabad 2000 (122) ELT 222 (Tri.)

10) Kalyani Steels Ltd. Vs CCE Pune 1998 (99) ELT 620 (Tri.)

5. Ld. A.R reiterated the findings of adjudication order and also OIA and submits that in respect of steel wires this Tribunal in appellant's own case reported in 2006 (202) ELT 106 (Tri.-Che.) upheld the Commissioner (Appeals) disallowing credit. In respect of steel wires, that order has not been appealed by the appellant. Therefore, it attained finality.

6. On other items, Ld. AR submits that Commissioner (Appeals) has discussed in his order on the applicability of Rule 57E of CER. Regarding Steel structures, appellants are not eligible for modvat credit. He relied Tribunal's Larger Bench in the case of Vandana Global Ltd. Vs CCE Raipur - 2010 (253) ELT 440 (Tri.-LB). He also relied Tribunal's decision in CCE Noida Vs D.S.M. Ltd. - 2003 (162) ELT 987 (Tri.-Del.).

7. We have carefully considered the submissions of both sides and examined the records. The period of dispute relates to April and May 1997 the modvat credit was denied under erstwhile Rule 57Q of CER. Out of 7 items, the major amount of credit relates to Dumpers falling under 8704 and Loader falling under 8429. On perusal of records, we find that these dumpers and loaders are used in the captive mines. We find that LAA has denied credit on the ground that mines are not part of the appellant's premises and on the other ground that these goods are not covered in list of captive mines and listed in Rule 57B (2). The use of capital goods in the captive mines the issue stands settled by the Hon'ble Supreme Court in the case of Vikram Cement Vs CCE Indore (supra). The relevant paragraphs 4 & 5 of the Supreme Court order is reproduced as under :-

"4. In so far as the Modvat/Cenvat credit on inputs (explosives, lubricating oils etc.) is concerned, the matter is squarely covered by the decision of this Court in the case of Vikram Cement v. CCE reported in 2006 (194) E.L.T. 3. Therefore, the appeals where credit on inputs is concerned, are allowed.

5.As regards the? Modvat/Cenvat credit on capital goods, if the mines are captive mines so that they constitute one integrated unit together with the concerned cement factory, Modvat/Cenvat credit on capital goods will be available to the assessee. On the other hand, if the mines are not captive mines but they supply to various other cement companies of different assessees, Modvat/Cenvat credit on capital goods used in such mines will not be available to the concerned assessee under the appropriate Modvat/Cenvat Rules. The matters are remanded to the respective original authorities for decision only on the above issue.

The ratio of the above apex court decision is squarely applicable to this case. The only condition that appellant should own the captive mines and not for other mines. We find that both the mines and factory are located within the same premises as per the plan layout including mining area and Central Excise registration was obtained as a single registration. Therefore, it is established that mines are captive mines forming integral part of the cement factory. We find that Tribunal in this Bench of the Tribunal in the case of CCE Vs India Cements Ltd. (supra), held that dumpers and excavators used in mines in connection with mining operations are eligible for modvat credit under erstwhile Rule 57Q. Therefore, in terms of Tribunal's order, and also by virtue of Apex court decision (supra), we hold that the appellants are eligible for credit on dumpers and loaders.

8. Regarding parts of machineries as at Sl.No.3, 4 & 5 the Emitting Electrodes are made up of steel and are used in Electrostatic Precipitator Classifier in Pollution Control Equipment; Classifier Housing is a stationery part and is located at top of the vertical mill which are used coal mill, cement mill and raw mill. Similarly steel casings are outer covers of equipment like bag filters, Bucket Elevators. There is no dispute that these are parts of capital goods. On perusal of Board's circular No.27/110-96-TRU dt.2.12.96 it is categorically clarified that all parts and components and accessories which are used in the capital goods under Rule 57Q and even if it is classified under any other chapter heading are eligible for modvat credit. We find that in the case of CCE Hyderabad Vs India Cement (supra) and ACC Ltd. Vs CCE (supra) wherein the Tribunal consistently held that parts and accessories are eligible for capital goods credit.

9. Regarding steel structures, we find that these items are fabricated from structural steel and are part of lime stone stacker and reclaimer which are used for supporting the bins, equipments etc. The Tribunal in the case of Global Sugar Ltd. Vs CCE (supra)held that structures supporting the machinery (not for construction of plant) are eligible for credit. Regarding the last item, steel wires appellants claimed that they are ropes used for handling equipments for lifting of heavy machineries etc. We find that, in the appellant's own case in the case of Madras Cements ltd. Vs CCE Trichy (supra) this Bench of the Tribunal has already disallowed the credit on steel wires which has attained finality. Therefore, this Bench cannot interfere with that decision and the said order has not been appealed by appellant. Accordingly, we hold the credit on steel wires are ineligible.

10. In view of the foregoing discussions, we hold that appellants are eligible for modvat on items as at Sl.No.(1) to (6) as above except Sl.No.7 and the appeal is partly allowed with consequential relief.

The appeal disposed of in the above terms.

(Dictated and pronounced in open court)

(P.K. CHOUDHARY) (R. PERIASAMI) JUDICIAL MEMBER TECHNICAL MEMBER

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