| SooperKanoon Citation | sooperkanoon.com/44232 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT |
| Decided On | Nov-30-2006 |
| Judge | S Peeran, J T T.K. |
| Appellant | Viswanath Sugars Ltd. |
| Respondent | The Commissioner of Central |
He ordered recovery of the Cenvat credit availed. Interest under Section 11AB was demanded. He imposed penalty equal to the duty demanded under Rule 13(2) and 15(2) of Cenvat Credit Rules 2002 and 2004 read with Section 11AC of the Central Excise Act. The appellants were aggrieved over the order and approached the Commissioner (Appeals) for relief. The Commissioner (Appeals) in the said order has observed that the adjudicating authority has placed reliance on the decision of the Apex Court in M/s Vikram Cement case as reported in 2005 (187) ELT 145 wherein it was held that "the term capital goods is not an inclusive definition and an item can be treated as capital goods under Cenvat Credit Rules only if it is satisfied that the goods fall under one of the specified chapters or headings of the tariff or it is spare parts, components, accessories or that it falls under one of the specified item. He has held that in the present case, general use of structural items classifiable under Chapter 72 & 76 are definitely not identifiable as parts accessories and components of capital goods falling under Chapter 82, 84, 85, 90 heading 6802 and sub-heading 6801.10" and with above observations he has upheld the denial of credit and payment of the same. The appellants are aggrieved over the impugned order.
2. Shri V.B. Gaikwad, learned advocate appeared for the appellants and Shri Anil Kumar learned JDR appeared for the revenue. The learned advocate urged the following points.
1) Shri Gaikwad pointed out that the Assistant Commissioner of Central Excise Belgaum has held that the impugned items are not capital goods but are inputs in view of the Apex Court's decision in the case of Vikram Cements v. CCE . However, he has refused to allow them credit on the said items in spite of holding the items as inputs by relying upon the Tribunal's decision in the case of Jai Hind Industries Ltd., v. CCE 2) The grievance of the appellant is in case, it is held that the item cannot be considered as capital goods atleast the eligibility of the items for modvat as inputs should have been considered by the Commissioner (Appeals). Unfortunately he has not considered this issue at all. In the following case laws it has been established that the structural items are components, spares, accessories of the sugar manufacturing equipment.Lloyds Steel Industries Ltd. v. CCE 3) In the light of the above decisions, the appellants are rightly entitled for modvat credit on capital goods.
4) In a catena of decisions, it is laid down that when an item on which the assessee has availed credit is not falling within the definition of capital goods but is falling within the definition of inputs then, the credit therein is not deniable to the assessee. The following decisions are relied on:CCE v. J.K. Synthetics Ltd. 5) There is a specific provision made by way of explanation to Rule 2 'G' declaring the items used in the manufacture of capital goods which are further used within the factory of production as inputs.
Hence there is no question of denying the credit on items admittedly used in the manufacture of sugar manufacturing equipments/structures thereof which are eligible capital goods.
6) In the following cases, it has been specifically laid down that the credit on the inputs used in the manufacture of capital goods which are further used within the factory of production is admissible. The following case laws are relied on:Star Paper Mills Ltd. v. CCE 4. We have gone through the records of the case carefully. The impugned items are as follows: The appellants availed Cenvat credit on them for the period from June 2004 to December 04. The above items are used by the appellants in the fabrication of the following sugar manufacturing equipment and structures: The appellants have cited large number of case laws in their support.
This bench in the case of Divis Laboratories v. CCE Visak 2006 (73) RLT-255 has held that various technological structures used for supporting machinery are entitled for modvat credit. In the case of Ramala Sahakari Chini Mills Ltd. v. 2006(77) RLT 251 Channels Joists etc., used in the construction of supporting structure for machinery and equipments are held to be entitled to modvat credit. In the case of Ispat Industries Ltd. v. CCE Mumbai 2006 (195) ELT 164, it was held that structural items such as angles channels, plates, rods required to make machines function without any vibration or movement cannot be said to be used in the construction of building but linked with machinery used in the production of final products. Thus the modvat credit in respect of such structurals was allowed. In the case of Dalmia Cements Ltd., v. CCE 2006 (77) RLT 190, the Tribunal has held that Steel angles used in fabrication of conveyor system are entitled for modvat credit as capital goods. The Tribunal in the case of Vikram Ispat v. CCE (2006)(76) RLT 862 has held that M.S Plates, M.S. Angles, M.S.Channels, Aluminium sheets which are not used as construction material are entitled for modvat credit as Capital goods. There are still many more decisions holding that structurals used for machinery are entitled for modvat credit as capital goods. If the lower authority has held that the impugned items are inputs in that case also, the benefit of modvat credit should have been extended. In these circumstances, we do not find any merit in the impugned order. Therefore, we allow the appeal with consequential relief.
(Operative portion of the order already pronounced in open court on conclusion of the hearing)