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TMI Blog2024 (5) TMI 1331X X X X Extracts X X X X X X X X Extracts X X X X ..... , [ 2015 (3) TMI 661 - MADRAS HIGH COURT] noticed VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] but relied upon the Apex Court judgment in COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS LTD. [ 2010 (7) TMI 12 - SUPREME COURT] , 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 Cenvat credit on MS Rod, sheets, MS Channel, MS Plate, etc., used for fabrication of structures to support various machines/capital goods. In M/S. THIRU AROORAN SUGARS, M/S. DALMIA CEMENTS (BHARAT) LTD. VERSUS CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, THE COMMISSIONER OF CENTRAL EXCISE [ 2017 (7) TMI 524 - MADRAS HIGH COURT] , a Division Bench of the Madras High Court held that irrespective of whether user test is applied, or the test that they are an integral part of the capital goods is applied, all such items fell within the scope and ambit of both Rule 2(a)(A) and 2(k) and, therefore, Cenvat credit was to be allowed on such goods. The impugned order cannot be sustained and is accordingly se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on use of such items to the Superintendent Preventive. Further, communications took place between the Appellant and the Department. 2.4 Subsequently, the show cause notice dated 01.10.2013 was issued, which proposed denial of CENVAT Credit based on the Explanation 2 as amended vide Notification No.16/2009-CE (NT), dated 7-7-2009 by inserting the words but shall not include cement, angles, channels, Centrally Twisted 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 with effect from the date of publication of the Notification. The Cenvat credit taken pertains to the period from September 2008 to September 2009, which partially falls prior to the amendment. 2.5 The learned Adjudicating Authority vide the impugned Order-in-Original has denied the credit to the Appellant on the ground that the said items were used in supporting structures for different capital goods and machineries. The said denial of credit against the inputs utilized in the fabrication of support structure is on the grounds that the credit on inputs utilized for constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentative justified the impugned order and has prayed for dismissing the appeal being devoid of any merits. 5. Heard both sides and perused the appeal records. 6. We find that the period involved in the present dispute pertains to 2005-06 to August 2008. At that relevant time, Explanation 2 to Rule 2(k) of the CENVAT Credit Rules, 2004 provided that inputs include goods used in the manufacture of capital goods, which are further used in the factory of manufacturer. The aforesaid Rule 2(k) was amended vide the Notification No.16/2009-CE(NT) w.e.f. 07.07.2009. Explanation 2 to Rule 2(k) provides that inputs include goods used in the manufacture of capital goods which are further used in the factory of manufacturer, but shall not include cement, angles, channels, CTD bar or TMT bar and other items used for construction of company, shed, building or laying of foundation or making of structures for support of capital goods. 7. Learned Advocate for the Appellant has submitted that a Larger Bench of the Tribunal in Vandana Global Ltd. v. Commissioner of Central Excise Raipur [2010 (253) E.L.T. 440], has held that the amendment introduced vide the notification dated 7-7-2009 was a clarifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... input . This Rule as framed initially in 2004, read as under:- 2(k) input means all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not, and includes lubricating oils, greases, cutting oils coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used for manufacture of final products or for any other purpose, within the factory of production. Explanation 1. - The high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever. Explanation 2. - Inputs include goods used in the manufacture of capital goods, which are further used in the factory of the manufacturer. (emphasis supplied) 12. Definition of input under Rule 2(k) was amended vide notification dated 7-7-2009. Amended provision inserted following clause in Explanation 2 by Cenvat Credit (Amendment) Rules, 2009 with effect from 7-7-2009:- but shall not includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clinical establishment, when such goods are used primarily for personal use or consumption of any employee; and (F) any goods which have no relationship whatsoever with the manufacture of a final product. Explanation. - For the purpose of this clause, free warranty means a warranty provided by the manufacturer, the value of which is included in the piece of the final product and is not charged separately from the customer. 15. From the perusal of the circulars dated 2-4-2012 and 18-5-2012, it comes out that these circulars have been issued in the changed context of the definition of [Rule] 2(k) of Cenvat Credit Rules, 2004 and both circulars have no concern for the period in issue. Thus, we find that the reliance placed by the Revenue in this regard has no substance. 16. 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 Cenvat credit on MS Rod, sheets, MS Channel, MS Plate, etc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 the test that they are in the integral part of the capital goods is applied, all such items fell within the scope and ambit of both Rule 2(a)(A) and 2(k) and, therefore, Cenvat credit was to be allowed on such goods. 35. In view of above settled position of law, since items used by the respondent-assessee were used as structure to hold the capital goods, hence, it is wrong to say that respondents are not eligible to Cenvat credit. Therefore, in our considered opinion, the Tribunal has rightly allowed the appeal and the reasoning given by the Tribunal cannot be said to be not cogent or correct appreciation of evidence on record. 19. We find that the facts of the present case are squarely covered by the above mentioned judgements of the Hon ble High Courts. In view of the above discussions, the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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