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TMI Blog2019 (6) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. - Central Excise Appeal No. - 21 of 2018 - - - Dated:- 23-5-2019 - Dr. Devendra Kumar Arora And Narendra Kumar Johari JJ. For the Appellant : Dipak Seth For the Respondent : Anoop Kumar,Rahul Agarwal ORDER 1.Heard Sri Dipak Seth, Senior Advocate, appearing for the appellant and Sri Rahul Agarwal, learned Counsel for the respondent. 2.The instant appeal under Section 35-G of Central Excise Act, 1944 (hereinafter referred to as 1944 Act ) read with Section 174 of Central Goods Services Tax Act, 2017 (hereinafter referred to as 2017 Act ) arises out of the judgment and order dated 2.11.2017 passed by Customs, Excise Service Tax Appellate Tribunal, Allahabad (hereinafter referred to as Tribunal ) in Appeal No. E/4077 of 2010 EX (DB) : M/s DSCL Sugar Vs. Commissioner Central Excise, Lucknow, whereby the appeal preferred by the respondents against the judgment and order dated 30.7.2010 passed by the Commissioner of Central Excise Service Tax, Lucknow, has been allowed and the order dated 30.7.2010 by which the demand was confirmed, has been set-aside. 3.V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide order-in-original dated 30.7.2010 and the demand of ₹ 61,72,407/- with interest and equal penalty was duly confirmed by the Adjudicating Authority. 8.Aggrieved by the aforesaid order-in-original dated 30.7.2010, the respondent has approached the Tribunal by means of Appeal No. E/4077 of 2010 EX (DB), which was allowed by the Tribunal vide order dated 2.11.2017. 9.Hence the revenue has preferred the instant appeal. 10.Sri Dipak Seth, learned counsel for appellant/revenue has contended that the respondent has claimed the Cenvat Credit on M.S. Plates, M.S. Channels, H.R. Coils, M.S. Angles etc. declaring them as inputs used for manufacturing/installation of Capital Goods/Structures for capital goods inside their plants, which is contrary to Rule 2 (h) read with Rule 2 (k) of Cenvat Credit Rules, 2004. 11.Elaborating his submission, Sri Seth has submitted that the Tribunal, while setting aside the order-in-original dated 30.7.2010, has erroneously not dealt with the findings recorded by the Commissioner to the effect that the items used for repair and maintenance or modification of plant and machinery as men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CENVAT Credit Rules, 2004. Thereafter, the Adjudicating Authority passed an order dated 30.7.2010, confirming the aforesaid demand by relying Explanation 2 to Rule 2 (k) inserted by Notification No. 16/2009-CE (NT) dated 7.7.2009 and the judgment of the larger Bench of the CESTAT in Vandana Global Ltd. Vs. C.C.E. : 2010 (253) ELT 440. The CESTAT, by the impugned order dated 2.11.2017, allowed the appeal preferred by the respondent-assessee. 15.Elaborating his submission, learned Counsel for the respondent has submitted that the period involved in the present dispute pertains to 2004-05 and 2005-06. At that relevant time, Explanation-2 of Rule 2 (k) of the CENVAT Credit Rules, 2004 provides that inputs include goods used in the manufacturer of capital goods, which are further used in the factory of the manufacturer. The aforesaid Rule 2 (k) was amended by the notification No. 16/2009-C.E. (NT) w.e.f. 7.7.2009. Consequently, w.e.f. 7.7.2009, Explanation-2 to Rule 2 (k) provides that inputs include goods used in the manufacturer of capital goods which are further used in the factory of the manufacturer but shall not include cement, angles, channels, Centrally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finition of inputs under the CENVAT Credit Rules 2004. Rule 2 (k) was completely substituted by the notification No. 3/2011-CE (NT) dated 1.3.2011 and a specific exclusion was provided for goods used for laying of foundation or making of structures for support of capital goods. It was in the context of the amended definition (w.e.f. 1.3.2011) of inputs in Rule 2 (k), the Circular dated 2.4.2012 was issued. It would be hazardous to rely upon the Circular dated 2.4.2012 to interpret the scope of inputs as it stood during the period 2004-2005 and 2005-06, when the statutory frame work was entirely different. 20.In the aforesaid backgrounds, submission of the learned Counsel for the respondents is that in view of the findings recorded by the CESTAT, which is the last fact finding authority, the respondent-assessee is eligible to avail CENVAT Credit on Shapes Sections, MS Plates, Mill Plates, MS Channel etc. used in the installation of capital goods inside their plaint. Thus, there is no error in the order of the Tribunal in allowing the appeal of the assessee. The present appeal is liable to be dismissed. 21.To strengthen his submission, learned Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are further used for manufacture of excisable goods are eligible for Modvat credit. Accordingly, we allow this appeal and set-aside the impugned order. Appellant shall be entitled for consequential relief, as per law. 25.Feeling aggrieved by the aforesaid order of the Tribunal, the revenue has filed the present appeal inter alia stating that the Board has issued clarification vide Circular dated 18.5.2012, in respect of its Circular No. 2.4.2012, wherein it was reiterated that in terms of Rule 2 (k) of the CENVAT Credit Rules, 2004, while CENVAT credit is available in respect of parts of Boiler, the same is not admissible in respect of structural components used for laying of foundation or making of structures for support of capital goods/Boiler, therefore, the Tribunal has erred in not considering the issue in its correct prospective. Furthermore, the Tribunal has erred in not applying the decision of Bajaj Hindustan Ltd. (supra), wherein this Court has held that CENVAT credit is not admissible on the inputs which were not used for manufacture of capital goods. 26.Refuting the submissions of the learned Counsel for the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , angles, channels, Centrally Wasted Deform bar (CTD) or Thermo Mechanically Treated Bar (TMT) and other items used for construction of factory, shed, building or laying of foundation or making of structures for support of capital goods. (emphasis supplied) 30.It may be noted that the Rule 2(k) was further substituted by notification dated 03/2011-CE(NT) dated 01.03.211 and a specific exclusion was provided for goods used for laying of foundation or making of structures for support of capital goods. Rule 2(k) as substituted w.e.f. 01.03.2011 reads as under: 2(k) input means: (a) all goods used in the factory by the manufacturer of the final product; or (b) any goods including accessories, cleared along with the final product, the value of which is included in the value of the final product and goods used for providing free warranty for final products; or (c)all goods used for generation of electricity or steam (or pumping of water) for captive use; or (d) all goods used for providing any (output service, or); (e) all capital goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd observed that the amendment made on 7-7-2009 cannot be held to be clarificatory and as such would be applicable only prospectively. 33.The Madras High Court in India Cement (supra) noticed Vandana Global (supra) but relied upon the Apex Court judgment in Rajasthan Spinning Weaving Mills Ltd. (supra), wherein the Apex Court has considered an issue of steel plates and MS channels used in the fabrication of chimney for diesel generating set and after considering it, the Apex Court allowed the cenvet credit on MS Rod, sheets, MS Channel, MS Plate etc. used for fabrication of structures to support various machines/capital goods. 34.In Thiru Arroran Sugars (supra), a Division Bench of the Madras High Court specifically considered as to whether MS structural, (which support plant and machinery), cement and steel (which are used in erecting foundations to hold plant and machinery) are integral part of capital goods eligible for cenvat credit under the Cenvat Credit Rules, 2004 prior to the amendment of Explanation 2 to Rule 2 (k) by notification dated 7.7.2009. The Madras High Court has held that irrespective or whether user test is test applied, or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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