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TMI Blog2015 (11) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to manufacture of iron ore concentrate at their Barbil Plant, which were ultimately be transferred to their manufacturing unit at Jajpur for manufacture of the said dutiable pellets falling under Chapter 26 of CETA, 1985 - Exemption under Notification No. 4/06-CE dated 1/03/2006 - Held that:- Out of iron ore fines(uneven sizes) iron ore concentrates in slurry form are manufactured and transported/cleared through pipelines to their pellet plant. The said iron ore concentrate became chargeable to duty w.e.f 01.03.2011. Therefore, it cannot be said that the inputs were directly used by bringing the same from the mines to the pellet plant at Jajpur. On the other hand, in the benefication plant the Iron Ore fines are converted into Iron ore concentrates in slurry form. In our opinion, therefore, the ratio laid down in Vikram Cement s case is not applicable to the facts of the present case. Consequently, the Appellants are not eligible to avail credit at their Pellet plant at Jajpur on the duty paid on the inputs , Capital goods and input services which are used in or in relation to the manufacture of Iron Ore concentrates at the benefication plant at Barbil. However, we find fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion No. 4/06-CE dated 1/03/2006, hence not eligible to CENVAT Credit in view of Rule 6 (1) and Rule 6 (4) of CENVAT Credit Rules, 2004. The Ld. Commissioner on adjudication, confirmed the demand and imposed penalty of ₹ 2.00 Crores under Rule 15 (1) of the CENVAT Credit Rules, 2004. Hence the present appeal. 3. Advancing the argument on behalf of the appellant, the Ld. Advocate Shri S.C. Mohanty for the appellant had submitted that in order to use the iron ore obtained from mines by subjecting to the process like crushing, screening, sizing, etc. known as beneficiation process, a separate plant had been set up at Barbil around 221 Kms. away from their jajpur factory. He has submitted that the iron ore concentrate manufactured in the beneficiation plant is classifiable under Chapter Sub-Heading 260011150 of CETA, which is an intermediate product for the manufacture oftheir final products i.e. Iron oxide pellets at Jajpur plant. He submits that the inter-mediate product is transferred from the Barbil plant to Jajpur in slurry form through specially designed pipeline and the entire quantity of slurry concentrates are consumed in their Jajpur plant for manufacture of iron oxide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.C. Ex., Belapur- 2013 (32) STR 532 (Bom). 6. Advancing their alternate argument, the Ld. Advocate has submitted that duty paid on inputs, capital goods and service tax used in or in relation to the manufacture of iron ore concentrate in the beneficiation plant at their Barbil Unit are eligible to CENVAT Credit at the said factory. It is his submission the Appellant had commenced manufacture of the dutiable product viz. Iron Ore Concentrate after the said unit was registered with the Central Excise Department w.e.f. 26/11/2012 and removed the same w.e.f. 07/06/13 on payment of duty. The Ld. Advocate has categorically submitted that production of slurry concentrates commenced from 06/06/2013, even though the Central Excise registration was obtained on 26/11/2012. It is his submission that the capital goods were never used in the beneficiation plant during the period when the concentrates remained exempted under Notification No. 04/2006-CE. Iron Ore concentrates had been manufactured for the first time w.e.f.06/6/2013 which was a dutiable product at the time of commissioning of the beneficiation plant. It is his submission that in view of the documentary evidences, it cannot be sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajpur plant. In the present case, the duty paid capital goods, inputs and input services in question were received, installed and also used at the Barbil plant used in or in relation to the manufacture of exempted iron ore concentrates. It is submitted that since the Barbil Plant and the Jajpur Plant of the appellant cannot be construed as one and the same unit, therefore, credit on inputs, input services and capital goods cannot be admissible at their Jajpur plant. 9. Rebutting the contention of the appellant that the duty paid input services need not be received in the factory at Jajpur, to be eligible to CENVAT Credit, he has submitted that the undisputed fact is that the duty paid input services were received in their Barbil Plant and used there in or in relation to the manufacture of exempted iron ore concentrates in that plant. It is, therefore, clear that the CENVAT Credit of duty paid on such input services which were used in or in relation to the manufacture of exempted iron ore concentrates at Barbil plant, cannot be allowed to be utilized for payment of duty on iron oxide pellets manufactured at Jajpur plant. 10. Further countering the contention of the Ld. Advocate fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons at para 6.2& 6.3 of the Order as: "iron ore pellets are manufactured at Jajpur plant, and the manufacturing activity is an independent operation. Similarly the manufacturing of iron ore concentrates in the benefication plant is also an independent manufacturing operation with manufacturing of separate excisable goods i.e. iron ore concentrates.Manufacturing activity leading to manufacture of iron ore concentrates is in no way connected to the manufacturing activity of pellets. The iron ore concentrates are raw materials for manufacture of pellets. These are cleared independently and since are in slurry form are transported through pipeline of about 221 kms. Mere transportation of goods in a pipeline does not make the benefication plant at Barbil a connected plant to Jajpur and can be construed, having undertaking a process connected to manufacture of iron ore pellets. I. Although iron ore concentrate is a raw material forPellets, its manufactured independently at the benefication plant, and cleared to be received at pellet plant. It is only incidental that, since the concentrates are in slurry form it is transported through a pipe line. Transportation is a separate activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Vikram Cement Vs. CCE, Indore-2006 (194) ELT (3) (SC) the input, capital goods and input services used in the manufacture of iron ore concentrate which are later transferred to their Jajpur plant for the use of manufacture of iron pellets, are eligible to CENVAT Credit at Jajpur factory. We do not find substance in the said contention of the Ld. Advocate in as much as facts and circumstances in Vikram Cements case and that of the facts of the present case are diagonally opposite. The Honble supreme Court in the case of Collector of Central Excise, Calcutta Vs. AL Noori Tobacco Products 2004(170) ELT 135(SC) emphasizing the necessity of care and caution in applying the principle of precedent observed as: "11.Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclids theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lea is to keep the path to justice clear of obstructions which could impede it." 16. In the Vikram Cements case, their Lordships have been confronted with the issue whether duty paid on explosives and other inputs, capital goods used inthe mines situated at a distance from the factory for extraction of lime stone which were used in the manufacture of cement and klinkers classifiable under Chapter 25, are eligible to CENVAT Credit or other wise. 17. The facts of the present case are however, stands on a different plane. As narrated in their submission, the appellant receive iron ore fines(uneven sizes) from the mines which are stored in the Silos installed in the benefication plant at Barbil. The iron ore fines are fed into the Grinding Mill for primary grinding, thereafter to the Ball Mill for further grinding, wherein the iron ore fines ultimately converted into the powder form. The grinded iron ore fines are transferred to Allflux for size classifier for getting the required sizes of iron ore fines. From the Allflux, the fines are transferred to Magnetic Separator, wherein magnetic impurities are removed from the iron ore fines.Then the iron ore fines are sent to the Thickener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... event the same are not admissible at their Jajpur plant. 20. Precisely, it is their submission that they had availed CENVAT Credit on the duty paid on input, input services and capital goods relating to Barbil plant at their Jajpur factory on theoretical basis in their books of accounts; but since the actual production of iron Ore Concentrate commenced from 06th June 2013, and cleared on payment of duty, they are eligible to avail and utilize the said CENVAT credit at their Barbil plant. 21. We find that this issue has been raised for the first time before this Tribunal and it is difficult to ascertain whether they have merely taken CENVAT Credit on their records at Jajpur plant before manufacture of iron ore concentrate at Barbil plant and not utilized the same; these facts need scrutiny and verification by the department. 22. On the issue of imposition of penalty, we find that CENVAT credit had been availed at Jajpur factory, on an interpretation of the relevant provisions of the CENVAT Credit Rules and principle of law laid down by the Honble Supreme Court in Vikram Cements case & other cases and also the demand notice is issued for the normal period without invoking sup ..... X X X X Extracts X X X X X X X X Extracts X X X X
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