Usha Martin Limited Vs Commissioner of Central Excise (CESTAT Kolkata)
CESTAT Kolkata held that denial of credit of service tax stating that coal and iron ore mines situated away from the factory is unsustainable as no material has been placed on record by the revenue to substantiate that the mines were owned by separate entities.
Facts- The Appellant has a manufacturing facility at Adityapur Industrial Area, Gamharia, Jamshedpur, engaged in the manufacture of dutiable iron and steel products falling under Chapter 72 of the CETA. Iron ore and coal are essential inputs for manufacture of the said dutiable final products.
Five periodical Show-cause Notices were issued covering the period 2005-06 to 2010-11 to the manufacturing facility of the Appellant proposing denial of Cenvat credit of service tax in respect of services provided at the coal/iron ore mines to the manufacturing facility. Further, Bokna Iron Ore Mines of the Appellant, which had obtained registration as an ISD, was also made a Co-Noticee for imposition of penalty in four out of five Notices for the alleged violation of Rule 7(b) read with Rule 15 of the Cenvat Credit Rules (CCR).All the five Show-cause Notices were issued invoking the extended period of limitation.
The crux of the issue before us in all these appeals is whether cenvat credit of service tax could be availed by the factory in respect of input services received at the captive coal & iron ore mines, either directly or on the strength of the ISD invoices issued by the Bokna Mines Office.
Conclusion- Held that Ld. Commissioner entertained a view that coal and iron ore mines situated away from the factory were separate entities having their own financial transactions engaged in the manufacture of exempted goods and consequently the services rendered at the mines could not be said to have been received by the factory. However, no material has been placed on record by the revenue to substantiate that the mines were owned by separate entities. On the contrary, it is evident from the coal and iron ore mining leases dated 15.10.2007 and 16.08.2005 that these mines were allotted to the Company, Usha Martin Limited (UML), for its captive use. The contention of the Appellant that the factory and the mines were a part of UML holding a single PAN has also not been negated/refuted by the learned Commissioner. Accordingly, we hold that the denial of credit of service tax by the Ld. Commissioner in the instant case is unsustainable.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The issues involved in Excise Appeal Nos. E-711/2010, E-722723/2010 and E-242-243/2012 are common and therefore all these appeals have been heard analogously and disposed by a common Order.
2. Briefly stated the facts of the case are that the Appellant has a manufacturing facility at Adityapur Industrial Area, Gamharia, Jamshedpur, engaged in the manufacture of dutiable iron and steel products falling under Chapter 72 of the CETA. Iron ore and coal are essential inputs for manufacture of the said dutiable final products. The Appellant was awarded a Captive Coal Mines (Kathautia) and Captive Iron Ore Mines (Bokna) at Jamshedpur pursuant to mining leases dated 15 October 2007 and 16 August 2005 respectively granted by the Jharkhand State Government. The entire quantity of coal and iron ore mined at Kathautia and Bokna respectively were transferred to the said manufacturing facility for use in the manufacture of dutiable goods save and except iron ore rejects which were not compatible for processing at the manufacturing facility.
3. The manufacturing facility operated under the Cenvat Credit Scheme and, inter alia, availed full/proportionate credit, as the case may be in respect of services rendered at the two mines including the services required for transportation of coal/iron ore from the respective Captive Mines to the manufacturing facility. Such credit was availed either on the strength of invoices issued by the supplier of services or on the basis of ISD invoices issued by the Bokna Iron Ore Mines.
4. Five periodical Show-cause Notices were issued covering the period 2005-06 to 2010-11 to the manufacturing facility of the Appellant proposing denial of Cenvat credit of service tax in respect of services provided at the coal/iron ore mines to the manufacturing facility. Further, Bokna Iron Ore Mines of the Appellant, which had obtained registration as an ISD, was also made a Co-Noticee for imposition of penalty in four out of five Notices for the alleged violation of Rule 7(b) read withRule 15 of the Cenvat Credit Rules (CCR).All the five Show-cause Notices were issued invoking the extended period of limitation and have culminated into the following proceedings:
