The India Cements Ltd vs Commissioner Of Central Excise

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

Appeal No.E/1115/2003

[Arising out of Order-in-Appeal No.459/2003-(SCN) TRY-II dt.22.9.2003 passed by the Commissioner of Central Excise (Appeals), Trichirapalli]

The India Cements Ltd. Appellant

Versus

Commissioner of Central Excise, Trichy Respondent

Appearance:

Shri S.Muthuvenkatraman, Advocate For the Appellant

Shri R. Subramanian, AC (AR) For the Respondent

CORAM :

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

Date of Hearing/Decision : 31.8.2015

FINAL ORDER No.41153/2015

Per R. Periasami

This appeal is taken up for fresh hearing in pursuance of the order of the Hon'ble High court, Madras in C.M.A. No.1535 of 2010 dated 24.4.2015. The Hon'ble High Court has set aside this Tribunal's Final Order No.1615/2009 dated 22.9.2003 and remitted the matter back to this Tribunal for passing a detailed and reasonable order. We reproduce below the relevant paragraphs of the Honble High Court as under :-

"7. In the present case, it is clear that the Tribunal is the final fact finding authority in the hierarchical chain. A perusal of the order under challenge would reveal that the facts, which are relevant for deciding the appeal, have not been discussed at all and as to how the decision of the Supreme Court and the Tribunal are applicable to the facts of the case. No reasons have been recorded by the Tribunal to arrive at the finding. This Court wishes to point out that the Tribunal could have been a little more explicit and clear while allowing the appeal by recording reasons, which are relevant to the case. It is not a case where the Department has conceded that the decisions of the Supreme Court or that of the Tribunal applies to the facts of the case. Such being the case, recording of reasons is of paramount necessity in all judicial and quasi-judicial orders. The order of the Tribunal, we find, is bereft of any reasoning. For better clarity, the order of the Tribunal is extracted herein below:-

"5. We find that all the three issues are covered by the cited decisions of the Hon'ble Supreme Court and the Tribunal under which the credit denied in respect of the three different items have been allowed. Following the ratio of the cited decisions, we set aside the impugned order in so far as it relates to the above three categories of impugned goods and allow the appeal. The cross-objection stands disposed off."

8. From the above order it is evident that the facts in issue, as has been raised by the Department in this appeal, have not been considered by the Tribunal before coming to the conclusion by recording reasons. In such view of the matter, this Court is unable to take up the admitted questions of law, as there is no proper appreciation or discussion on facts and how the ratio of the decisions referred to in the order of the Tribunal will be applicable to the facts of the present case.

9. For the reasons aforesaid, this appeal is disposed of by setting aside the impugned order of the Tribunal and remanding the matter back to the Tribunal for passing a detailed and reasoned order. However, in the circumstances of the case there shall be no order as to costs."

2. We find that the issue involved in the present appeal relates to denial of credit on (i) denial of credit on parts of surface miners used in the mines (ii) availment of credit on CCTV Cameras used in the Kiln (iii) Whether percentage of eligibility of credit is 75% or 100% on the goods cleared under project imports prior to 1.3.1997.

3. Ld. Advocate appearing for the appellant filed written submissions and reiterated the same. He submitted that surface miners being used in the mines for extraction of lime stones, parts of the miners are eligible for credit. In this regard, the Ld. Advocate relied on this Tribunal's Final Order No.40674 dated 19.06.2015 reported in CCE Trichy Vs The India Cements Ltd.2015-VIL-316-CESTAT-CHE- and the ruling of the Supreme Court in Vikram Cements case reported in 2006 (194) E.L.T. 3 (S.C.) wherein it was held that the mines of the appellants factory are their captive ones.

3.1 As regards credit availed on CCTV Cameras, he submitted that same were used inside the kiln and relied upon the following judgement reported in 2009 (243) E.L.T. 577 (Tri. - Che) CC Ex. Madurai vs. Sterlite Industries (P) Ltd.

3.2 On the third issue, he submitted that they are eligible for 100% credit. He relied on the case law reported in CCE Jaipur Vs Raj Cement reported in 2003 (159) ELT 302 (Tri.-Del.)

4. On the other hand, the Ld. AR for the Revenue reiterated the findings of the Learned Appellate Authority at para 5 of the OIA and submitted that surface mines are excluded from Rule 57Q. Therefore parts of surface mines are not eligible for credit. Similarly, CCTV Cameras are not eligible for credit and submitted that since the goods are imported under project imports they are eligible only for 75% of credit as per Rule 57Q (3) read with sub-rule (7). He relied on the decision of this Bench in the appellant's own case reported in India Cements Ltd. Vs CCE Trichy - 2010 (254) ELT 344 (Tri.-Chennai).

5. After hearing both sides, we find that the issue in the present appeal relates to denial of credit on three issues (i) denial of credit on parts of surface mines used in the mines (ii) availment of credit on CCTV Cameras used in the Kiln (iii) eligibility of 100% credit on the goods cleared under project imports prior to 1.3.1997. As per the directions of the Honble High Court, Madras, we have examined the admissibility of credit on each of the inputs used in the mines and whether the appellants have their own captive mines. This Tribunal in Final Order No.40674/2015 dated. 19.6.2015 reported in CCE Trichy Vs The India Cements Ltd.2015-VIL-316-CESTAT-CHE- in appellants own case dealt the issue of use of capital goods and inputs in their own captive mines. Therefore, there is no dispute on the use of parts of surface mines in the capital goods at mines. Further, we find that in the appellant's own case, the Tribunal in the case of CCE Trichy Vs India Cements (supra) reported in 2010 (251) E.L.T. 299 (Tri. - Chennai) had held that credit on Lubricants used in machinery like surface miner, dumper, etc. in captive mines and are admissible for credit. It is seen that there are a large number of decisions holding the eligibility for capital goods which are used in the mines and outside the factory premises. One of the judgments in the case of Vikram Cement Vs CCE, Indore reported in 2006 (194) E.L.T. 3 (S.C.) held that credit was eligible for capital goods used outside the factory.

6. Further, we find that the Hon'ble High Court in the appellant's own case reported in 2015-TIOL-451-HC-MAD-CX allowed the appeal holding that cenvat credit on grease and lubricants used in the factory / captive mines and High Court relied the judgments in Vikram Cement case reported in 2006 TIOL-150-SC-Cx and Madras Cements Ltd case reported in 2010-TIOL-59-SC-CX. The Honble High Court also answered substantial questions of law in favour of the appellant/assessee and against the department/respondent. Therefore, in view of above High Court's decision, we hold that appellants are eligible for credit on parts of surface miners. Further, we find that the goods were imported under project import as is evident from the show cause notice and rightly classifiable under 9801 and not under chapter 8430. The act of the department in seeking to classify the goods under Chapter 8430 as against 9801 being clearly traversing beyond the show cause notice, is not sustainable in law.

7. As regards CCTVs, we find that CCTVs are installed inside the kiln which is essential to monitor the manufacture of finished goods. Therefore, they are eligible for credit. This Tribunal in the case of CCE Vs Sterlite Industries (I) Ltd. - 2009 (243) ELT 577 (Tri.-Chennai). The relevant portion of Tribunal's order (supra) is extracted below:

2. We have heard both sides. We find that PLC Hardware, CCTV System and Radio Remote Control are instrumentation materials used in the control system of the plant for monitoring the manufacturing activity; that all the high speed rotating systems are controlled by the PLC Hardware. CCTV system is a remote eye which controls the fuel process. The Radio Remote Control is also used to monitor the manufacturing activity. Memory Module accessories are instrumentation spares used in direct control system. All these items are, therefore, in the nature of components or accessories of the smelter plant which falls under Heading 84.10 which is an eligible (specified) heading under Rule 57Q of the Central Excise Rules. We, therefore, uphold the extension of capital goods credit on these four items.

3.?As regards Camera Mount and Monitor Mount, they are used to monitor the whole smelter which is monitored by advance control system called distribution control system. Smelting operations such as lance operation, tapping, pellatisation etc. are monitored by operators through CCTVs. Camera/Monitor Mount is part of the CCTV. Therefore, they are to be treated as accessories of the smelter plant and hence eligible to credit.

and in the case of Jaypee Bela Plant Vs CCE Raipur  2003 (161) ELT 422 (Tri.-Del.) the Tribunal clearly held that CCTV is directly related to the manufacturing process. In the present case, CCTVs were fixed inside the kiln in the cement factory. The learned Advocate submitted that the closed circuit Televisions are installed in the production area namely kiln sintering zone and grate cooler area to enable the operators to monitor the burning zone area of kiln like flame, clinker size during the production process; that thus the CCTVs are essential to monitor the manufacture of final products. On the other hand, the Adjudicating Authority has denied the Modvat credit on CCTVs on the ground that these are not used in producing or processing of any goods or for bringing about any change in the manufacture of final products. We agree with the submissions of learned Advocate that CCTVs are eligible capital goods as they take part in producing or processing of any goods because they are used to monitor the burning zone area of kiln. We accordingly hold that they are eligible to take the Modvat credit of the duty paid on CCTVs.

8. As regards admissibility of 100% of credit on the project import goods, we find that credit goods were imported in March 1996. We find that on a perusal of D-3 declaration submitted on 22.3.96 which is annexed in page 23 and 24 of the paper book, the capital goods were received in the factory on 22.3.96. Therefore, the date of receipt of capital goods in the appellant's unit is relevant. As per amended rule 57Q (3) which stipulates that credit is eligible only to the extent of 75% effective from 1.3.97 whereas in the present case the date of receipt of capital goods is 22.3.96. Therefore, the appellants are eligible for 100% credit. The Tribunal in the case of CCE Vs Raj Cement (supra) clearly held as under:

10. We have heard the rival submissions. We have? also perused the evidence on record as also the various case law cited by the respondent. On careful consideration of the various submissions made before us and the case law cited, we note that the basic issue that arises for determination in this case is whether the respondent herein was entitled to Modvat credit at 75% or 100% of CVD paid on imported goods. We note that the restriction of 75% of CVD came only on 1-3-97 whereas the goods were received in the factory prior to 1-3-97 though they were installed after 1-3-97.

11. On perusal of the various case law cited? before us, we note that for purpose of Modvat credit under Rule 57Q, the date of receipt of the goods in the factory is material date. Right to taking credit accrued from the date of receipt of the goods in the factory, we note further that there was no restriction as to quantum of duty that could be taken as Modvat credit prior to 1-3-97 and the goods were received in the factory prior to 1-3-97. Therefore, we hold that the respondent herein is entitled to Modvat credit at 100% of CVD right from the date of receipt of the goods. This view is further supported by Boards circular

The court held that the restriction of 75% applies only from 1.3.1997 whereas in the present case, the goods were received in the factory prior to 1.3.97. Applying the decision of the Tribunal (supra) and also taking into consideration that, in the present case, the receipt of goods as established from D-3 declaration is 22.3.96, we hold that appellants are eligible for 100% credit of CVD paid on the goods imported under project imports.

9. In view of foregoing discussions, the appellants are eligible for credit on parts of surface miners, CCTV Cameras installed in the Kiln and they are also eligible for 100% credit on the CVD paid on the goods imported under project imports. Accordingly, the impugned order is set aside and the appeal is allowed to the extent of allowing credit on these three items.

(Dictated and pronounced in open court)

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

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