| SooperKanoon Citation | sooperkanoon.com/37596 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai |
| Decided On | Dec-31-2004 |
| Judge | S T S.S., T Anjaneyulu |
| Appellant | Kalyani Steels Ltd. and ors. |
| Respondent | Commissioner of Central Excise |
2. Vide Commissioner order no 7/2000 dated 12.04.2000 Commissioner Central Excise (Belgaum) disallowed Modvat Credit of Rs. 56,184 availed on capital goods by M/s Kalyani Steels Ltd Harpet Road Gingara (herein after referred to as KSL for short) appellant in E/1976/2000 and imposed equivalent penalty with interest under Rule 57 U(6) and 57U(8).
Ordered confiscation under Rule 173Q of six electric motors found in KSL which were not purchased nor declared to be installed and used in KSL for the purpose of Rule 57Q, however redemption fine of Rs. 60,000/- was offered to KSL, confiscation orders of goods, belonging to KSL, under Rule 173O(2) were passed with redemption fine of Rs. one lakh. Penalty under Rule 209 A were imposed on Shri Vijay Sharma CEO, Shri R.M. Dubey associate vice president, Shri PVS Chandrasekharan DRM Shri T. Bhaskar executive (Sharma) appellants in E/2243/00, E/2436/00, E/2241/00, E/2242/00.
3. Vide common order no 9/2000 dated 24042000, Commissioner Central Excise (Belgaum) disallowed capital goods credit of Rs. 44,61,310 availed by M/s Mukund Limited Hospet (herein after refereed to a ML for short) imposed a penalty of equivalent amount and interest as par Rule 57 U(6) and 57 U(8), penalty under Rule 173Q(1) of Rs. 25 lakhs and ordered confiscation of DG sets, control panels and capital goods installed at CWC 8b motors etc under Rule 173Q(1) and gave an option to redeem the same on a fine of Rs. 25 lakhs in lieu of confiscation.
Ordered confiscation of land building machinery etc under Rule 173 Q(2) and gave an option of redemption on fine of Rs. 20 lakhs. Further penalties were imposed on the Chief Executor Officer and other employers. Hence appeal no E/1989/2000, E/2147/2000, E/2146/2000, E/2145/2000, E/ 2144/2000-09-28 4. These appeals are being disposed off after hearing both sides, by this common order, since the issues are interrelated. The facts in brief are- Sometime in 1994 an idea was conceived by M/s Kalyani Steels Ltd Pune, (KSL for short) to manufacture carbon and alloy steel through mini blast furnace (MBF for short) they entered into strategic alliances agreements with M/s Kalyani Ferrous Industries Ltd (KFIL) and M/s Mukund Steel Mumbai (ML) and set up a interconnected steel plant on 374 hectares of land purchased by KSL at Ginigera Kespet Karnataka. The agreements envisage- i) KFIL would set up a plant with MBF technology to manufacture 'Pig iron' ii) ML would set up a plant with energy optimizing furnace (EOF) technology , to manufacture steel blown/billets/ingots.
iii) KSL would set up a rolling mill for rolling the rounds/ billets/ blown / ingots.
The agreement involved sharing of final products in a predetermined ratio. The independent registration of the three companies was retained as Public Limited Company, having their plants elsewhere, including on the common location at Ginigera, within the common lay out in adjacent sequences to effectuate the treatment of iron ore to the stage of rolled out final products in an ergononic and economic fashion. While KFIL obtained excise registration for liquid Pig iron /solid pig iron; ML for steel billets, blown, inputs and rounds and to receive liquid Pigtron as job work for USL as well as on own account. While KSL registered itself for rolled products and discharge duty on the same.
These rolled products were to be manufactured from alloy steel received from ML, on own account and job work. Thus final product of KFIL are raw material at ML whose final product is raw material for KSL. The movement of liquid pig iron is more in ladles on EOT cranes from KFIL to ML to KSL etc. The EOT crane extends and travels in between the plants. Similarly the diesel generating sets and common receipt 85 distribution of electricity by cables are common shared capital expenses and goods . The ground plans, were submitted and approved by the Central Excise Officers. There is no contest on payment of duty by these units and or manufacture of the goods. Claim is of capital goods Modvat Credit, by the assessees who procured the capital goods and filed appropriate returns. In 1909, an investigating team was deputed to verify the correctness of the credits availed. Consequent to these verifications, Show Cause Notices were issued seeking to deny credit availed oh and impose penalties as follows 4. Whereas it appears from the above that KFIL have contravened the provisions of Rule 57Q and Rule 57S of the Central Excise Rules, 1944 in as much as: (i) DG sets as detailed in Annexure A on which Modvat Credit of Rs. 20,78,351/- was availed and utilized under Rule 57Q of the CER, 1944 were not installed in (heir factory, contrary to the contents of the installation certificate furnished to the Department; but were lying / installed out of the factory premises of KFIL; (ii) EOT Crane on which Modvat Credit of Rs. 14,37,650/- was availed under Rule 57Q of the CER, 1944 is installed to spread installation over/beyond the premises of KFIL and into the factory premises of M/s Mukand Limited, Ginigera and it is also being used for handling the ladles and Pig Iron in the premises of M/s Mukand Limited, Ginigera; (iii) Ladles on which Modvat of Rs. 6,70,800/- was availed and utilized under Rule 57Q of the CER, 1944, are being removed out of the factory premises of KFIL and into the adjacent factory of M/s Mukand Limited for use in holding/handling and delivering liquid metal in the latter is factory premises; The EOT Crane (i.e. ii above) together with ladles (iii above) in their use, as aforesaid appears to be analogous to a lorry / Tripper / Wagon / Vehicle, for transportation of materials outside the factory which are not eligible for credit under Rule 57Q since the same moves out of the factory of the manufacturer for carrying the material and are put in use by any other person, other than the assessee, who purchased the material. (The fact that the assessee mentions the ladle number in the column meant for vehicle number in the invoice under Rule 52A issued for clearance of liquid Pig Iron appears to confirm the nature and use of the ladles.); (iv) Equipments installed in MRSS (As per Annexure "B" ) on which Modvat credit of Rs. 23,14,079/- was availed and utilized under Rule 57Q of the CER, 1944 appears to be commonly used with M/s Mukand Limited, M/s Kalyani Steels Limited and M/s Praxair Limited, Ginigera; (v) Cables (As per Annesure B.3) on which Modvat Credit of Rs. 18,95,413 - was availed and utilized under Rule 57Q of the CER, 1944 are laid beyond the factory premises of KFIL and are apparently used for transmission and receipt of power by three other units viz., M/s Mukand Limited, M/s Kalyani Steels Limited and M/s Praxair Limited, Ginigera; 4. Six No., of Motors and one No., of Motor on which Modvat credit of Rs. 56,184/- and Rs. 11,987/- was availed and utilized by KFIL respectively under Rule 57Q of the CER, 1944. The said six No., of Motors and one No., of Motors are installed out of the factory premises of KFIL and in the premises of M/s KSL. Ginigera and M/s ML, Ginigera respectively. Apparently the Motors are used by the units where the Motors are installed instead of the units i.e. by M/s KFIL which has availed and utilized Modvat Credit.
Whereas it appears from the above that ML have contravened the provisions of Rule 57 Q and Rule 57S of the Central Excise Rules, 1944 in as much as: (i) Crane on which Modvat Credit of Rs. 2,81,190/- was availed under Rule 57Q of the CER, 1944 is installed to spread installation over / beyond the premises of ML and into the factory premises of M/s Kalyani Steels Limited, Ginigera. The said crane is also used in the premises of M/s Kalyani Steels Limited, Ginigera for lifting and placing the Billets / Blooms at appropriate place for their re-heating, which appears to be violation of Rule 5 7Q and Rule 5 7S of the Central Excise Rules, 1944.
(ii) D.G. Set on which modvat credit of Rs. 8,58,000/- was availed, appears to be commonly used for distribution of power to M/s ML as well as M/s KSL.
(iii) Control Panel S-3 on which modvat credit of Rs. 7,64,964/- was availed, appears to be commonly used for distribution of power to Ms ML and M/s KSL.
(iv) The capital goods installed in the Central Water Complex (CWC) on which Modvat Credit of Rs. 4,42,546/- was availed, appears to be commonly used by M/s KF1L, ML, KSL and M/s Praxair India Ltd, Ginigera.
(v) Control Panel S-8A, Control Panels S4, Control panels-S6 and Control Panels S-7 on which (he assessee availed credit appear to have been removed out of their premises in contravention of Rule 57S of Central Excise Rules, 1944. Apparently, these control panels are installed in the premises of M/s KSL / KFlL, who are exclusively using these capital goods for manufacture of final products in the premises of KSL/ KFIL (vi) One No., of Motor on which Modvat Credit of Rs. 13,246-00 was availed by ML, appear to have been installed out of the factory premises of ML and in the premises of KSL, Ginigera. The removal of the said Motor out of the ML premises appears to be in contravention of the Rule 57S of CER, 1944.
(vii) The Control Panels S-2 and S-5A and S-5B although installed in the premises of ML, appear to be in the exclusive use of M/s KFIL (MBF) in contravention of Rule 57Q(1) and Rule 57S(1) (i) of CER 1944 Where as it appears that M/s Kalyani Steels Ltd, Hospet Road, Ginigera -583 228 Taluka and Dist: Koppal (hereinafter referred to as "KSL " or "the assessee") holders of Central Excise Registration No. 320205000 are engaged in the manufacture of Rolled Products falling under Chapter 72 of the schedule to the Central Excise Tariff Act, 1985, and have been working under "Self assessment procedure" (which is a liberalized version of Self Removal Procedure).
2. During investigation it was found that KSL had purchased 6. No. of Motors vide invoice bearing No. 960 dated 30.11.1996 and availed Modvat Credit of an amount of Rs. 56,184/- vide entry No. 84 dated 1.5.1999 in their RG 23C Pt.II. But on verification it was found that they were installed in the premises of M/s KF1L, another manufacturing factory situated near to KSL. It was also found that these Motors were being exclusively used by M/s Kalyani Ferrous lnds., Limited, Ginigera. In the brief write-up dated 7.12.99, furnished by the authorized signatory of KSL, it has been confirmed that they had purchased eight No. of Motors; and since M/s Mukand Limited and M/s Kalyani Ferrous lnds., Ltd., Ginigera were coming up simultaneously out of the eight Motors, six Motors were installed allegedly inadvertently in the Rolling Pump Home situated in the premises of M/s Kalyani Ferrous lnds., Limited, Ginigera, Further it has also been mentioned that Motors of same type, capacity, make, value and Modvat Credit were purchased by M/s Kalyani Ferrous Industries Limited, Ginigera vide their invoice No. 956 dated 30.11.1996 which allegedly were got interchanged and installed in the premises of KSL.
i) As per the installation certificate No. 4 dated 30.4.1999 signed by Shri R.M. Dubey, Associate Vice President (Mech. and Maintenance) in the letter head of KSL it was certified that the Motors referred to above received under the invoice No. 960 dated 30.11.96 were installed on 21.3.1999. Though the place of installation is not specifically mentioned, it was apparent that these Motors were installed in the factory of KSL, as the certificate is in the letter head of M/s KSL, without any contrary indication.
ii) The location of the actual installation of the above said six No. of Motors purchased by KSL under invoice No. 960 dated 30.11.96 in the premises of M/s Kalyani Ferrous lnds., Limited, Ginigera instead of in the premises of KSL is duly accepted by Shri L.
Bhaskar, (Authorised Signatory) in the aforesaid write-up dated 7.12.99. As per Rule 57S of the Central Excise Rules, 1944, removal of Capital Goods on which credit is availed should he on payment of duty, as if such Capital Goods were manufactured by the manufacturer, who wailed the credit. In the instant case the assessee did not pay the duty involved therein when these Motors were removed for installation in the factory premises of Ms Kalyani Ferrous Inds Limited, Ginigera. Thus, removal of these six Motors by KSL appears to be in violation of Rule 57S of the Central Excise Rules, 1944.
iii) Further, it appears that the said six motors on which credit was availed by KSL are not being used by KSL at all; they are under the exclusive use of M/s KFIL, another factory situated near the assessee, in whose premises they are installed. Hence KSL does not appear to be eligible for Modvat credit of Rs. 56,184-00 because the said Motors are neither installed in their factory nor used in the factory of KSL far manufacture of final products contrary to the provisions of Rule 57Q and Rule 57S of the Central Excise Rules, 1944. The removal and installation of Motors out of the premises of KSL was not declared / intimated to the Department till the factual position was ascertained by the Officers during investigation.
Moreover, the assessee submitted the installation certificate to the effect that they were installed in their own premises. Hence the availment / utilization of credit involved on these six motors is apparently by reasons of fraud, suppression of facts and mis-statement with an intention to evade payment of duty.
5. Whereas it appears from the above that KFIL have contravened the provisions of Rule 57Q and Rule 57S of the Central Excise Rules, 1944 in as much as: (vi) DG sets as detailed in Annexure A on which Modvat Credit of Rs. 20,78,351 - was availed and utilized under Rule 57Q of the CER, 1944 were not installed in their factory, contrary to the contents of the installation certificate furnished to the Department; but were lying / installed out of the factory premises of KFIL; (vii) EOT Crane on which Modvat Credit of Rs. 14,37,650/- was availed under Rule 57Q of the CER, 1944 is installed to spread installation over/bevond the premised of KFIL and into the factory premises of M/s Mukund Limited, Ginigera and it is also being used for handling the ladles and Pig Iron in the premises of M/s Mukand Limited, Ginigera; (viii) Ladles on which Modvat of Rs. 6,70,800/- was availed and utilized under Rule 57Q of the CER, 1944, are being removed out of the factory premises of KF1L and into the adjacent factory of M/s Mukand Limited for use in holding/handling and delivering liquid metal in the latter's factory premises; The EOT Crane (i.e. ii above) together with ladles (iii above) in their use, as aforesaid appears to be analogous to a lorry / Tripper / Wagon / Vehicle, for transportation of materials outside the factory which are not eligible for credit under Rule 57Q since the same moves out of the factory of the manufacturer for carrying the material and are put in use by any other person, other than the assessee, who purchased the material. (The fact that the assessee mentions the ladle number in the column meant for vehicle number in the invoice under Rule 52A issued for clearance of liquid Pig Iron appears to confirm the nature and use of the ladles.); (ix) Equipments installed in MRSS (As per Annexure "B" ) on which Modvat credit of Rs. 23,14,079/- was availed and utilized under Rule 57Q of the CER, 1944 appears to be commonly used with M/s Mukand Limited, M/s Kalyani Steels Limited and Ms Praxair Limited, Ginigera; (x) Cables (As per Annexure B.3) on which Modvat Credit of Rs. 18,95,413 - was availed and utilized under Rule 57Q of the CER, 1944 are laid beyond the factory premises of KElL and are apparently used for transmission and receipt of power by three other units viz., M/s Mukand Limited, M/s Kalyani Steels Limited and M/s Praxair Limited, Ginigera; (xi) Six No., of Motors and one No., of Motor on which Modvat credit of Rs. 56,184/- and Rs. 11,987/- was availed and utilized by KFIL respectively under Rule 57Q of the CER, 1944. The said six No., of Motors and one No., of Motors are installed out of the factory premises of KFIL and in the premises of M/s KSL. Ginigera and M/s ML, Ginigera respectively. Apparently the Motors are used by the units where the Motors are installed instead of the units i.e. by M/s KFIL which has availed and utilized Modvat Credit.
5. Whereas it appears from the above that ML have contravened the provisions of Rule 57Q and Rule 57S of the Central Excise Rules, 1944 in as much as : (viii) Crane on which Modvat Credit of Rs. 2,81,190/- was availed under Rule 57Q of the CER, 1944 is installed to spread installation over / beyond the premises of ML and into the factory premises of M/s Kalyani Steels Limited, Ginigera. The said crane is also used in the premises of M/s Kalyani Steels Limited, Ginigera for lifting and placing the Billets /Blooms at appropriate place for their re-healing, which appears to be violation of Rule 57Q and Rule 57S of the Central Excise Rules, 1944.
(ix) D.G. Set on which modvat credit of Rs. 8,58,000/- was availed, appears to be commonly used for distribution of power to M/s ML as well as M/s KSL.
(x) Control Panel S-3 on which modvat credit of Rs. 7,64,964/- was availed, appears to be commonly used for distribution of power to M/s ML and M/s KSL.
(xi) The capital goods installed in the Central Water Complex (CWC) on which Modvat Credit of Rs. 4,42,546/- was availed, appears to be commonly used by M/s KFIL, ML, KSL and M/s Praxair India Ltd, Ginigera.
(xii) Control Panel S-8A, Control Panels - S4, Control panels-S6 and Control Panels S- 7 on which the assessee availed credit appear to have been removed out of their premises in contravention of Rule 57S of Central Excise Rules, 1944. Apparently, these control panels are installed in the premises of M/s KSL / KF1L, who are exclusively using these capital goods for manufacture of final products in the premises of KSL/ KFIL.
(xiii) One No., of Motor on which Modvat Credit of Rs. 13,246-00 was availed by ML, appear to have been installed out of the factory premises of ML and in the premises of KSL, Ginigera. The removal of the said Motor out of the ML premises appears to be in contravention of the Rule 57S of CER, 1944.
(xiv) The Control Panels S-2 and S-5A and S-5B although installed in the premises of ML, appear to be in the exclusive use of M/s KFIL (MBF) in contravention of Rule 57Q(1) and Rule 57S(1) (i)of CER, 1944.
Where as it appears that M/s Kalyani Steels Ltd., Hospel Road, Ginigera -583 228 Taluka and Disi: Koppal (hereinafter referred to as "KSL " or "the assessee") holders of Central Excise Registration No. 320205000 are engaged in the manufacture of Rolled Products falling under Chapter 72 of the-schedule to the Central Excise Tariff Act, 1985, and have been working under "Self assessment procedure" (which is a liberalized version of Self Removal Procedure).
2. During investigation it was found that KSL had purchased 6. No. of Motors vide invoice bearing No. 960 dated 30.11.1996 and availed Modvat Credit of an amount of Rs. 56,184/- vide entry No. 84 dated 1.5.1999 in their RG 23C Ft. 11. But on verification it was found that they were installed in the premises of M/s KFIL, another manufacturing factory situated near to KSL. It was also found that these Motors were being exclusively used by M/s Kalyani Ferrous Inds., Limited, Ginigera. In the brief write-up dated 7.12.99, furnished by the authorized signatory of KSL, it has been confirmed that they had purchased eight No. of Motors; and since M/s Mukand Limited and M/s Kalyani Ferrous Inds., Ltd., Ginigera were coming up simultaneously out of the eight Motors, six Motors were installed allegedly inadvertently in the Rolling Pump House situated in the premises of Ms Kalyani Ferrous Inds., Limited, Ginigera. Further it has also been mentioned that Motors of same type, capacity, make, value and Modvat Credit were purchased by M/s Kalyani Ferrous Industries Limited, Ginigera vide their invoice No. 956 dated 30.11.1996 which allegedly were got interchanged and installed in the premises of KSL.
i) As per the installation certificate No. 4 dated 30.4.1999 signed by Shri R.M. Dubey, Associate Vice President (Mech. and Maintenance) in the letter head of KSL it was certified that the Motors referred to above received under the invoice No. 960 dated 30.11.96 were installed on 21.3.1999. Though the place of installation is not specifically mentioned, it was apparent that these Motors were installed in the factory of KSL, as the certificate is in the letter head of M/s KSL, without any contrary indication.
ii) The location of the actual installation of the above said six No. of Motors purchased by KSL under invoice No. 960 dated 30.11.96 in the premises of M/s Kalyani Ferrous Inds., Limited, Ginigera instead of in the premises of KSL is duly accepted by Shri L.Bhaskar, (Authorised Signatory) in the aforesaid write-up dated 7.12.99. As per Rule 57S of the Central Fxcise Rules, 1944, removal of Capital Goods on which credit is availed should be on payment of duty, as if such Capital Goods were manufactured by the manufacturer, who availed the credit. In the instant case the assessee did not pay the duty involved therein when these Motors were removed for installation in the factory premises of M/s Kalyani Ferrous Inds Limited, Ginigera. Thus, removal of these six Motors by KSL appears to be in violation of Rule 57S of the Central Excise Rules, 1944.
iii) Further, if appears that the said six motors on which credit was availed by KSL are not being used by KSL. at all they are under the exclusive use of M/s KFIL another factory situated near the assessee, in whose premises they are installed Hence KSL does not appear to be eligible for Modvat credit of Rs. 56,184-00 because the said Motors are neither installed in their factory nor used in the factory of KSL for manufacture of final products contrary to the provisions of Rule 57Q and Rule 57S of the Central Excise Rules, 1944. The removal and installation of Motors out of the premises of KSL was not declared / intimated to the Department till the factual position was ascertained by the Officers during investigation.
Moreover, the assessee submitted the installation certificate to the effect that they were installed in their own premises. Hence the availment / utilization of credit involved on these six motors is apparently by reasons of fraud, suppression of facts and mis-statement with an intention to evade payment of duty 6. These appeals, are being disposed by this common order, after hearing and considering the issue, it is found- i) Rule 57Q, as it stood, on introduction, prescribed eligibility of credit on capital goods as defined and "Which were used in the manufacture of dutiable products". The subsequent amendments never prescribed on exclusive use or bar of an use by others.
ii) The Capital goods used should be in the factory and when the definition of the word 'factory' in the Central Excise law is seen use and placement of such goods in precincts of the premises,, would be use in the factory premises from the ground plan map shown and the site of the electrical sub station and the (sic) portion of the units; there is no doubt on the eligibility of credit as availed on the capital goods, ie EOT crane, equipment involved in the electrical sub station, cables DG. Sets Ladles. No specific reasons have been brought out by the adjudicator or adjudicator or before us to deny the eligibility on Shared use reasons. Movements of E.O.T crane cannot be removal out of factory. We follow the case law to arrive at the above as in the case of J.K. Udaipur Udjog Ltd (2002 (53) RLT 754CCE v. Pepsrico India Holding Ltd (2002(42) RLT 800 U.Cr v. Tata Iron & Steel Co (1977) 1 ELT 169 SC, Finolex India 2003 (156) ELT 96 Diamond Traders (2004 (169) 34. We cannot persuade ourselves to follow the decision in this cases reported in (1999 (113) ELT 84 (T) and 1999 (107) 135 they not only to be a single member decisions or also relying on the other decisions herein and the law that Credit should be granted and specifically denied.
iii) Since the matter is being remitted for re-determine of the eligibility as regards Electrical Panels etc; found and admitted to be used exclusively in a premises of a licensee other than where the credit was availed, we would also remit the matter on eligibility of Credit on electrical meters on merits to be reconsidered, in light of the plea of mix up of serial numbers. The question of time bar is kept open for re-determination along with penalty if any, and its quantum, which would depend upon the quantum of credit found to be not permissible, to be arrived at after hearing the appellants.