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TMI Blog2024 (9) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... COMMISSIONER OF CENTRAL EXCISE [ 2017 (7) TMI 524 - MADRAS HIGH COURT] and also decision of Larger Bench of this Tribunal in the case of M/S. MANGLAM CEMENT LTD. VERSUS C.C.E., JAIPUR-I [ 2018 (3) TMI 1547 - CESTAT NEW DELHI] , wherein it is held that CENVAT credit on various inputs such as MS Angles, MS Channels, MS beams, MS joists, MS plates, etc., used in the fabrication of various machineries, support structure, platforms for machineries and equipment, etc., used in the factory, is admissible. For the period from 07.07.2009 to October 2009 the definition of input under Rule 2(k). The Explanation 2 has been inserted to the said definition vide Notification No.16/2009CE(NT) dated 07.07.2009. Consequently, the items viz., HR coils, HR Sheets, M.S. Angles, M.S. Channels and MS plates, etc., has been specifically excluded from the scope of the definition of inputs . Thus, for the period prior to 07.07.2009, the appellants are eligible to avail CENVAT credit on the inputs viz., HR coils, HR Sheets, M.S. Angles, M.S. Channels and MS plates, etc., and accordingly, demand confirmed is not sustainable; for the period 07.07.2009 to October 2009, in principle CENVAT credit on the inputs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sts, etc. In support of use of the said materials, necessary Chartered Engineer certificate has been placed by the appellant before the authorities below. The learned Commissioner (A) has failed to take note of the said Chartered Engineer s certificate dated 07.11.2009 which was submitted much before the issuance of show-cause notice. He has further submitted that Vandana Global Ltd. vs. Commissioner of Central Excise Customs, Raipur: 2018 (16) GSTL 462 (Chhattisgarh). 3.1 Elaborating his argument, he has submitted that the appellant had set up manufacturing unit at Chintamani for the manufacture of plywood, pre-laminated boards, etc., and some of the capital goods required for manufacture of plywood, prelaminated boards were fabricated within the factory from the inputs such as M.S. Angles, M.S. Steel Plates, M.S. Flats, C. R. Plates, M.S. Pipes, ISMB, ISMC, etc. The components/parts so fabricated were assembled and installed to become part of the equipment required for manufacture of plywood, pre-laminated boards. A part of the total inputs were utilised in other civil works in which structural steel, TOR steel, etc., were utilised and CENVAT credit availed on such inputs amounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra and covered by the judgement of Hon ble Chhattisgarh High Court in Vandana Global s case, whereunder it is observed as follows:- 4 . In the light of the contents of the impugned order of the Tribunal and submissions of the assessee and the Revenue following substantial questions of law are formulated for consideration : (A) Whether the terms capital goods excludes the structures embedded to earth? (B) Whether the goods like angles, joists, beams, bars, plates, which go into fabrication of such structures are not to be treated as input used in relation to their final products as inputs for capital goods, or none of the above? (C) Is the amendment brought in CENVAT Credit Rules, 2004 as per Rule 2 of the CENVAT (Amendment) Rules, 2009 retrospective in nature considering is it clarificatory to be applied to all matters which arise before 7-7-2009, the date of commencement of the CENVAT (Amendment) Rules, 2009 : hereinafter referred to as Amendment Rules . 5 . The impugned order of the Tribunal had come up for consideration before different High Courts either cited as precedent or as relied upon by the Tribunal in different other matters. The Gujarat High Court in Mundra Ports Speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s:- 43 . As would be evident from the aforesaid extract, in Rajasthan Spinning Weaving Mills Limited case, the Court relied upon the user test, enunciated, in its earlier judgment rendered in : Jawahar Mills Limited case. Clearly, the Court held that steel plates and MS Plates, i.e., structurals used in the fabrication of the chimney, which were an integral part of the diesel generating set would fall within the ambit and scope of definition of capital goods. The Court, went on to further hold that such equipment had to be treated as an accessory. As a matter of fact, in Saraswathi Sugar Mills case, the Court, while noticing the view taken in Rajasthan Spinning and Weaving Mills Limited said that as long as it could be shown that the item in issue was an integral part of the machinery, i.e., capital goods, it would fall in the definition of component and thus, by logical extension, come within the ambit of capital goods . 43.1 To be noted, Hon ble Mr. Justice D.K. Jain, (as he then was), was party to both the judgments rendered by the Supreme Court i.e., Rajasthan Spinning and Weaving Mills Limited as well as Saraswathi Sugar Mills Limited case. 43.2 Therefore, quite clearly, the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the goods (excepting light diesel oil/high speed diesel oil and motor spirit) are considered to fall under such definition, when used in or in relation to manufacture of final products , whether directly or indirectly, and whether contained in the final product or not. The only condition required to be fulfilled is that the goods must be used within the factory of production. Further, Explanation 2 appended to such definition clause provides that input includes goods, which are used in the manufacture of capital goods for further use in the factory of the manufacturer. On a conjoined reading of the definition of input and Explanation 2 appended thereto, it makes the position clear that inputs are not only goods, which are used in the manufacture of final products, but also those which are used in or in relation to the manufacture of the final product. The relationship between those goods and the final product could be either direct or indirect and may include or may not include their presence in the final products. Goods used in the manufacture of capital goods, which are installed for manufacture of the capital goods should also be considered for availment of Cenvat credit. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital goods which are further used in the factory of the manufacturer but shall not include cement, 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 structure for support of capital goods. 9. In view of the above discussions, for the period prior to 07.07.2009, the appellants are eligible to avail CENVAT credit on the inputs viz., HR coils, HR Sheets, M.S. Angles, M.S. Channels and MS plates, etc., and accordingly, demand confirmed is not sustainable; for the period 07.07.2009 to October 2009, in principle CENVAT credit on the inputs viz., HR coils, HR Sheets, M.S. Angles, M.S. Channels and MS plates, etc., are not admissible. Consequently, the impugned order is modified and the appeal is remanded to the original adjudicating authority to recalculate the demand for the period after 7.7.2009, if any, payable. However, no penalty is imposable on the appellants. Needless to mention that the appellant may be given a reasonable opportunity of hearing. 10. Appeal is disposed of on above terms. (Order pronounced in Open Court on 30.08.2024.) - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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