HIGH COURT OF KARNATAKA
Commissioner of Central Excise, Belgaum Commisionerate
Hindalco Industries Ltd.
C.E.A. NO. 209 OF 2008
JULY 30, 2012
N. Kumar, J. – The Revenue has preferred this appeal against the order passed by the Tribunal declining to interfere with the order passed by the Commissioner of Excise holding that the impugned items are entitled for Modvat Credit.
2. A show-cause notice came to be issued to the assessee holding that they are not eligible to avail and utilise the Cenvat credit on the capital goods such as (i) all the goods falling under Chapter, 82, 84, 85, 90 under the heading 6802, 6801.10 of the first Schedule to the Tariff Act; (ii) the pollution control equipment; (iii) components, spares and accessories of the goods specified at (i) and (ii) above; (iv) moulds and dies, (v) refractories and refractory materials; (vi) tubes and pipes and fittings thereof; (vii) storage tanks used in the factory of the manufacturer of final products, but does not include any equipment/appliances used in the office.
3. The assessee gave his reply contending that they are entitled to the Cenvat credit. The assessing authority passed an order-in-original disallowing the Cenvat credit wrongly availed on ineligible capital goods and accordingly, ordered that the Cenvat credit availed should be recovered. Consequently, demanded interest and imposed penalty.
4. Aggrieved by the said order, the assessee preferred an appeal to the Commissioner of Central Excise. On careful consideration of the entire material, the first appellate authority held that the Hon’ble Tribunal and High Courts have repeatedly held that such items used as structural and parts and accessories of installed capital goods for their repair and maintenance are eligible for credit both as capital goods as well as inputs. Therefore, the order-in-original was set aside and he declared that the assessee is eligible for availment of Cenvat credit as ‘capital goods’. Aggrieved by the said order, the Revenue preferred the appeal before the Tribunal.
5. The Tribunal on careful consideration and re-examination of the entire material on record, held that the respondents had taken and utilised the Cenvat credit in respect of the structural items such as MS Plates, Channels, MR Coils, HR coils. The said goods, fall within the definition of the ‘capital goods’. The Tribunals have been consistently holding that the impugned items are entitled for ModVat credit. In those circumstances, it is not correct to charge the assessee with suppression of facts, fraud, collusion with intent to evade duty. Therefore, both on merit as well as on bar of limitation, the appeal filed by the Revenue came to be dismissed.
It is aggrieved by the said order, the present appeal is filed.
6. This Court had an occasion to consider the very same issue which is involved in this appeal in CCE v. ICL Sugars Ltd. [CEA No. 95 of 2009, dated 8-4-2011] disposed of on 08.04.2011. After referring to several judgments of this Court, it was held as under:
“4. The learned counsel appearing for the revenue assailing the impugned order contended that as per the definition of Rule 57-Q there was no storage tank included in the definition of capital goods. It is only by Notification dated 01.03.2001 in the definition of capital goods the storage tank is inserted. Therefore, for the period anterior to the said amendment the Cenvat credit could not have been given on the inputs used in the manufacture of storage tanks. Even otherwise, though the water stored in a storage tank is used in the manufacture of sugar, the syrup and molasses stored in the storage tank are not used in the manufacture of sugar, on the contrary it is derived in the course of manufacture of sugar and therefore, the assessee is not entitled to the benefit of Cenvat Credit. Though in the definition of Rule 57-Q the storage tank was not included, it is clear from the aforesaid definition that the tubes, pipes and fittings thereof used in the factory were included in the definition of capital goods. The storage tank has been held to be a component to the main machinery namely, boiler and the benefit is extended to the inputs used in the construction of the storage tank though it is also embedded to the land. On the same reasoning the assessing authority ought to have extended the benefit to the syrup and molasses storage tank also, as they are by products in the course of manufacturing activity which are also excisable at the time of selling the same to the assessee. It appears even when the storage tanks if specifically mentioned in the definition of capital goods by liberally incorporating these provisions the benefit was extended to the assessee. However, the controversy remains. In order to set right this controversy by a Notification, specifically storage ‘ tank is introduced within the definition of capital goods. The said insertion is classificatory in nature. Under these circumstances, even though the said insertion was in the year 2001 we are concerned with the period anterior to the said insertion.
5. Having regard to the aforesaid facts and also the fact that the assessing authority has himself extended the benefit to storage tank storing water as a component to main machinery namely, boiler, he ought to have extended the benefit to the storage tanks which are also part of the factory premises, in which the by products are stored and thereafter sold as a finished product. In that view of the matter, we do not find any justification to interfere with the orders passed by the appellate authority. In those circumstances, we answer the substantial question of law in favour of the assessee and against the revenue.”
7. In that view of the matter, we do no see any merit in this appeal. No substantial question of law arises for consideration in this appeal.
Accordingly, the appeal is dismissed. No costs.
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