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TMI Blog2016 (1) TMI 1059X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 2004 and other contentions raised in these Appeals would become more of academic in nature rather than resolving the dispute, hence not resorted to. - Credit allowed - Decided in favor of assessee. - Appeal Nos.EA-102, 394, 520/06, 233/10 & 199/11, 135, 136/10 - ORDER NO.FO/A/75016-75022/2016 - Dated:- 5-1-2016 - DR. D.M. MISRA, MEMBER(JUDICIAL) AND SHRI H.K.THAKUR, MEMBER(TECHNICAL) For the Petitioner : Dr. Samir Chakraborty, Advocate Shri Abhijit Biswas, Advocate For the Respondent : Shri D.K.Acharya, Spl. Counsel ORDER Per Dr. D.M. Misra. These seven appeals are filed against respective orders of the Commissioner of Central Excise, Bolpur/Jamshedpur and Commissioner of Central Excise(Appeals), Kolkata by the Appellants M/s Tata Steel(Appeal No. E/102/2006) M/s SAIL(Appeal Nos.E-394, 520/06, 233/10 199/11) and Revenue(Appeal Nos.E-135-136/10), respectively. Since the issue involved in all these appeals are common, accordingly these are taken up together for hearing and disposal. 2. The facts involved in M/s.Tata Steel Ltd., are marginally different from the facts involved in other appeals filed by M/s.SAIL also by the Revenue, henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re that the appellants had availed CENVAT Credit on rails falling under Chapter Sub-Heading 7302.10 claiming the same as input being utilised in the Railway Locomotive Network spread inside the factory/plant for convenient transportation of raw materials, semi-finished goods and other materials. The department issued show cause cum demand notices from time to time alleging that eligibility of CENVAT Credit on rails other materials claiming as inputs was irregular since it was shown as fixed asset and not inputs in their respective Balance sheets. Also, the amount of credit claimed on rails was not eligible to credit as the same failed to satisfy the definition of capital goods contained in Rule 2(b)/2(a) of CENVAT Credit Rules, 2002/2004. In the case of Appeal No.E-394/06, the show cause notice was issued on 14.08.2003 for the period 01.04.2000 to 31.03.2003 invoking extended period of limitation, but in all other Appeals periodical demand notices were issued for the normal period. On adjudication, the demands were confirmed with interest and equivalent penalty imposed. Aggrieved by the said orders the present appeals. 2.4. The other two appeals bearing Nos.E-135 136/10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is his argument that the aforesaid functions imparted by using the rails are integrally connected to the process of manufacture and clearance of dutiable products within the factory, directly or indirectly and the present issue stands settled by the recent judgement of the Hon ble Supreme Court in the case of Jayaswal Neco Ltd. v. CCE - 2015 (319) ELT 247(SC). It is his contention that even though the said judgement was in the context of Rule 57Q of erstwhile Central Excise Rules, 1944, the principles laid down therein are squarely applicable to CENVAT Credit Rules, 2002/2004, as schemes of MODVAT and CENVAT Credit are held to be not different by the Hon ble Supreme Court in Vikram Cement v. CCE - 2006 (194) ELT 3 (SC). The ld. Advocate also placed reliance on the decision of Hon ble Rajasthan High Court in the case of Aditya Cement v. UOI - 2008 (221) ELT 362(Raj.) wherein the credit on railway track materials was held to be admissible. 3.3 The ld.Advocate further submitted that the reliance placed by the Revenue on the judgment of Jharkhand High Court in their case in WP (T) No.2463/2004 is completely misplaced. He has argued that while disposing the SLP carried out against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly in the factory of the manufacturer. Hence, there is no requirement for the said goods to enter into the mainstream process of manufacture of final products in the factory. So long as it can be shown that the material used as inputs have a nexus, even indirect with a process, which is integrally connected with the ultimate production of the final product till they are fit for being put into marketing stream and such process is so integrally connected with the ultimately production of the final products that it would be commercially inexpedient to produce the finished goods without the process, all such inputs are eligible to benefit of CENVAT Credit. The transfer of raw materials and finished products and handling thereof for the purpose of such transfer is integrally connected with the process of manufacture. The railway tracks are and would be used in the operation of transfer of raw materials and finished product. Thus, they are used in or in relation to manufacture of final product and accordingly raw materials are eligible to CENVAT Credit as inputs under rule 2(g)/2(k) of CENVAT Credit Rules,2002/2004. 3.6 It is his contention that CENVAT Credit allowed on all goods cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd.v. CCE - 2010 (261) ELT 308(T), SAIL v. CCE, Raipur - 2014 (311) ELT 709(Tri.-Delhi) and CCE v. Bhilai Steel Plant - 2010 (261) ELT 612 (Tri.-Delhi),. 3.9 Further, referring to subsequent Orders-in-Appeal passed by the Commissioner of Central Excise(Appeals), Kolkata, the ld.Advocate submitted that rails the Ld. Commissioner(Appeals) had considered the same eligible to CENVAT credit. Also, he has submitted that recently, in adjudicating the periodical Show Cause Notices issued to M/s SAIL for the subsequent period i.e. from March 2008 to Oct.2014, the Ld. Commissioner of Central Excise, Ranchi, following the decision of Honble Supreme Court in M/s Jayaswal Neco Ltd s case dropped the demands holding that railway track materials are eligible to CENVAT Credit vide Order-in-Original No.07-12/MP/Commr./RAN-II/2015-16 dt. 07.08.2015. Hence, in view of the decision of the Hon ble Supreme Court in the case of Birla Corporation Ltd. Vs. CCE 2005 (186) ELT 266(SC), Jayswal Neco Ltd. Vs. CCE,Nagpur 2006(195) ELT 142(SC), Indian Oil Corporation Ltd. v. CCE - 2006 (202) ELT 37(SC), the Revenue cannot contend to the contrary, wherein for subsequent period in case of the same assessee or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on capital goods as defined. Rails have various uses as mentioned in Chapter 73 of the CETA, for railways, tramways, switches, plates, crossings, tracks, fish-plates and sale plates etc.. These are classifiable under Tariff Item 7302. In Section Note 1(F) of Section XV of CETA,1985 these items are excluded from Section XVI i.e. machinery, appliances and electrical goods. Under CENVAT Credit Rules, 2002 or 2004 such rails of Chapter 73 are excluded from capital goods eligible to CENVAT Credit. It is his contention that in the CENVAT Credit Rules, 2002/2004, apart from general items like pollution control equipments, moulds and dice, refractory pipes, tubes and storage tanks, capital goods are those who are classifiable under Chapter 82, 84, 85, 90; some headings of Chapter 68 also included. Rails being under Chapter 73 are by definition (Section Notes) excluded from Section XVI i.e. Chapters 84 and 85 and also not covered by any of the items of Chapter 82 or 90; only railway track fixtures and fittings are covered by Chapter 86, but the said Chapter 86 is outside the benefit of CENVAT Credit as capital goods, under CENVAT Credit Rules, 2002 or 2004, hence, not eligible to CENVAT Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e context was interpretation of defunct Rule 57Q of erstwhile Central Excise Rule,1944 and now the present cases are in a different time zone and legal regime, hence not applicable. Further, he has submitted that rails have been utilized by M/s.SAIL in the railway locomotive network for movement of wagons and the rails are thus claimed as capital goods. It is his contention that the rails are classifiable under Chapter 73 of CETA and if rails are considered as components/accessories of locomotives which are classified under Chapter 86 of CETA, the said Chapter 86 is also excluded from the scope of definition of capital goods. It is his contention that if the rails are part of overhead crane system, the same are admissible to CENVAT Credit as capital goods, subject to production of necessary installation certificates/evidences. 5.1 Heard both sides at length and perused the records. 5.2 The issue involved in the present case centers around eligibility to CENVAT Credit on the items, namely, rails, sleepers, joints, crossings etc. used inside the factory in the railway net work for transportation of raw materials, semi-finished, finished goods and also in the overhead cranes. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals, we find that no serious analysis of the relevant provisions of the statute and the principle of law settled in this regard while disallowing or allowing the credit had been recorded. The ld. Sr. Advocate Dr. Chakraborty has vehemently argued that the principle of admissibility of CENVAT Credit on rail and railway track materials is no more res integra which has been settled by the Honble Supreme Court in the recent judgment of M/s Jayaswal Neco Ltd.s case (supra). It is his contention that since the Honble Apex Court has categorically held that CENVAT credit on the railway track materials are admissible, being essential and integrally connected to the process of manufacture of final products, even though the judgement relates to Rule 57Q of erstwhile Central Excise Rules, 1944, the principle laid down therein applicable even to the present cases under Cenvat Credit Rules,2002/2004. In support, he refers to the judgment of Honble Supreme Court in Vikram Cements case (supra) wherein their Lordships have held that there is no difference in the MODVAT and CENVAT Scheme. Challenging the said contention, the learned Special Counsel for the Revenue has submitted that the short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppler to stacker reclaimer where stacking and reclaiming of raw material is taken place and required quantity is conveyed for further processing at stock house. 16. It reflects that the appellant has installed railway tracks within the plant which is a handling system for raw material and processed material. 17. The aforesaid process squarely meets the test laid down by this court in M/s. J.K. Cotton Spinning Weaving Mills Co. Ltd.s case. It is clear that the railway tracks are installed not only within the plant, but the main objective and purpose for which the capital expenditure on laying these railway tracks is incurred by the appellant is for transporting hot metal in ladle placed on ladle car from blast furnace to pig casting machine through ladle car where hot metal is poured into pig casting machine for manufacture of pig iron. It is clear from the above that the use of railway tracks inside the plant not only form the process of manufacturing, but it is inseparable and integral part of the said process inasmuch as without the aforesaid activity for which railway tracks are used, there cannot be manufacturing of pig iron(emphasis supplied). 5.7. On the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the same question in the case of one assessee and question its correctness in the case of some other assessees. The Revenue cannot pick and choose. [See : Union of India Others v. Kaumudini Narayan Dalal Another [2001 (10) SCC 231]; Collector of Central Excise, Pune v. Tata Engineering Locomotives Co. Ltd. [2003 (158) E.L.T. 130 (S.C.)]; Birla Corporation Ltd. v. Commissioner of Central Excise [2005 (186) E.L.T. 266 (S.C.)]; Jayaswals Neco Ltd. v. Commissioner of Central Excise, Nagpur [2006 (195) E.L.T. 142 (S.C.)], etc.] 7. It was held in Birla Corporation Ltd. (supra), as under : In the instant case the same question arises for consideration and the facts are almost identical. We cannot permit the Revenue to take a different stand in this case. The earlier appeal involving identical issue was not pressed and was, therefore, dismissed. The respondent having taken a conscious decision to accept the principles laid down in Pepsico India Holdings Ltd. (2001 (130) E.L.T. 193) cannot be permitted to take the opposite stand in this case. If we were to permit them to do so, the law will be in a state of confusion and will place the authorities as well as the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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