CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
SINGLE MEBER BENCH
Excise Appeal No.818 & 17 of 2009-SM
(Arising out of Order-in-Appeal No.168-CE/LKO/2008 & No.169-CE/LKO/2008 dated 11.11.2008 passed by the CCE (A), Lucknow)
For approval and signature:
Honble Mr. Ashok Jindal, Member (Judicial)
- Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
- Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
- Whether Their Lordships wish to see the fair copy of the Order?
- Whether Order is to be circulated to the Departmental authorities?
CCE, LucknowAppellants
Vs.
M/s.Bajaj Hindustan Ltd. Respondent
Present for the Appellant: Shri Anil Khanna, SDR
Present for the Respondent: Shri Bipin Garg, Advocate
Coram: Honble Mr. Ashok Jindal, Member (Judicial)
Date of Hearing/Decision: 03.03.2011
ORDER NO.______
PER: ASHOK JINDAL
The Revenue is in these appeals against the impugned orders wherein the credit availed by the respondents on welding electrodes was allowed on the ground that the same has been used for fabrication of their capital goods.
2.The facts of the case are that the respondents are manufacturers of sugar. During the course of repair and maintenance of their machinery they require welding electrodes. The show cause notices were issued to the respondents that the welding electrodes are falling under chapter heading 8311 in the nature of consumables and other structural items. Hence, the respondents are not entitled to claim the credit of duty paid on these welding electrodes. The show cause notices were adjudicated where the issue framed whether the welding electrodes were used for fabrication and manufacture of capital goods which are further used for manufacture of final goods can qualify as input or not. The adjudicating authority confirmed the demand relying upon the decision of this Tribunal in the case of G.S.Mill Aira [Final Order No.299/07-SM(BR) dt.9.2.07]. On appeal before the Commissioner (Appeals), the claim of the respondents was allowed by setting aside the order in original. Aggrieved by the said order, the Revenue is before me.
3.Learned SDR submitted that in this case the welding electrodes have been used for maintenance for expansion of their plant and machinery as admitted by the respondents and further submitted that in the case of Vandana Global Ltd.-2010 (253) ELT 440 (Tri.-LB), this Tribunal has held that whether plant or structure embedded to earth, the assessee is not entitled for the credit on the items used for manufacturing of that plant/structure. He also relies on the decision of the Apex Court in the case of Vikram Cements vs. CCE, Indore 2005 (187) ELT 145 (SC). He also relies on the decision of the Apex Court in the case of SAIL vs.CCE-2008 (229) ELT A27 (SC). Learned SDR further submitted that the credit of capital goods is available on the items which are excisable goods covered under the definition of capital goods under Cenvat Credit Rules, 2004 used in the factory for manufacture of inputs which are covered by the definition of inputs under Rule 2(k) of Cenvat Credit Rules, 2004. He further submitted that in the case of Ramala Sahkari Chini Mills vs. CCE, Meerut-2010 (260) ELT 321 (SC) wherein the definition of inputs itself has been questioned. So the impugned order is to be set aside.
4.On the other hand, learned Advocate for respondents submitted that the issue whether the welding electrodes used in the repair and maintenance of plant and machinery and whether the assessee is entitled for the credit on the inputs has been decided by the Honble Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd. vs. CCE, Raipur-2010 (256) ELT 690 and the Honble Karnataka High Court in the case of CCE, Bangalore-I vs. Alfred Herbert (India) Ltd.-2010 (257) ELT 29 (Kar.), in both the cases, Honble High Courts have held that welding electrodes used in the repair and maintenance of the plant and machinery are entitled for credit. Hence, the impugned orders may be upheld and the appeals filed by the Revenue are rejected.
5.Heard and considered.
6.I have considered the submissions of learned SDR and the findings that the issue as per show cause notices issued was that whether the welding electrodes used for fabrication and manufacture of capital goods which are further used for manufacture of final products qualify for availement of credit as inputs as per Rule 2(k) of Cenvat Credit Rules, 2004 or not. But the decision in the case of Vandana Global Ltd. is not applicable to the facts of this case as in that case the issue before the Larger Bench of this Tribunal was that whether plant or structure embedded to earth, the assessee is not entitled for the credit on the items used for manufacturing of that plant/structure. This is not the case here. The case of the Vikram Cements vs. CCE, Indore is also not relevant to the facts of this case as that case is dealt with capital goods. The case of relied upon in the case of SAIL vs. CCE (supra) is also not relevant to the facts of this case as the said decision has been discussed by the Honble Karnataka High Court in the case of Alfred Herbert (India) Ltd. (supra) that said decision is for the denial of credit to which earlier rules were applicable and the present Cenvat Credit Rules are not applicable. In the case of Ramala Sahkari Chini Mills vs. CCE, the department has failed to produce any such order of the Apex Court.
7.I find that the issue has been dealt by the Honble Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd. vs. CCE, Raipur and Honble Karnataka High Court in the case of CCE, Bangalore-I vs. Alfred Herbert (India) Ltd. wherein both the Honble High Courts have held that welding electrodes used in the repair and maintenance of the plant and machinery are entitled for credit. Also on the point judicial pronouncement by the highest court has held by the Honble Bombay High Court in the case of Mercedes Ben India Pvt.Ltd. vs. Union of India-2010 (252) ELT 168 (Bom.). Accordingly in these appeals, the respondents are entitled for credit availed by them on welding electrodes which are used by them for fabrication and repair and maintenance of their capital goods. Accordingly, I do not find any infirmity in the impugned orders and the same are upheld. The appeals filed by the Revenue are rejected.
(pronounced in the open court)
(ASHOK JINDAL)
MEMEBR (JUDICIAL)
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing:09.02.11
Date of decision:09.02.11
Excise Appeal No.1530 of 2008 &
Excise Appeal No.264 of 2009-SM (BR)
[Arising out of Order-in-Appeal No.68-CE/LKO/08 dated 28.5.2008 passed by the Commissioner of Central Excise (Appeals), Lucknow in Appeal No.E/1530 of 2008 and Order-in-Appeal No.164-CE/LKO/08 dated 31.10.2008 in Appeal No.E/264 of 2009-SM (BR)].
M/s. Oudh Sugar Mills Ltd.Appellant
Vs.
CCE, Lucknow Respondent
Excise Appeal No.E/1062 of 2009-SM (BR)
[Arising out of Order-in-Appeal No.21-CE/LKO/2009 dated 2.2.2009 of the Commissioner of Central Excise (Appeals), Lucknow].
M/s. Gobind Sugar Mills Ltd. Appellant
Vs.
CCE, Lucknow Respondent
For approval and signature:
Honble Shri Rakesh Kumar, Member (Technical)
- Whether Press Reporters may be allowed to see CESTAT (Procedure) Rules, 1982.
- Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publicationin any authoritative report or not?
- Whether Their Lordships wish to see the fair copy of the Order?
- Whether Order is to be circulated to the Departmental authorities?
Appearance: Rep. by Shri Rajesh Chibber, Advocate for the appellants.
Rep. by Shri Krishna Pratap Singh, SDR for the respondent.
Rep. by Shri R.K.Gupta, SDR for the respondent.
CORAM:Honble Shri Rakesh Kumar, Member (Technical)
Order No/Dated: 9.2.2011
Per Rakesh Kumar
Heard both the sides.
2.The only issue involved in these three appeals is as to whether the Welding Electrodes used for repair and maintenance of the plant and machinery are eligible for Cenvat credit or not as input or capital goods.
3.Shri Rajesh Chhiber, ld. Counsel for the appellants, citing the judgement of theHonble Chattisgarh High Court in the case of Ambuja Cement Eastern Ltd. reported in 2010 (256) ELT 690 and the judgement of the Honble Rajasthan High Court in the case of Hindustan Zinc Ltd. reported in 2008 (228) ELT 517, wherein it was held that the Welding Electrodes used for repair and maintenance of plant and machinery are eligible for cenvat credit as input as well as capital goods, pleaded that the impugned order denying the cenvat credit in respect of these items is not correct.
4.Shri K.P. Singh, ld. Departmental Representative pleaded the Welding Electrodes used for repair and manufacture of plant and machinery are neither covered by the definition of the input nor are covered by the definition of capital goods, that recently the Honble
Supreme Court in the case of Ramala Sahakari Chini Mills Ltd. Vs. CCE, Meerut-I reported in 2010 (260) ELT 321 (SC) has referred this issue to a Larger Bench, that the Tribunal in the case of Steel Authority of India Ltd. reported in 2008 (222) ELT 233 had held that the Welding Electrodes used for repair and maintenance of the plant and machinery are not eligible for cenvat credit and the SLP filed by the SAIL against this order of the Tribunal had been dismissed by the Apex Court vide judgement reported in 2008 (22) RLT A-27(SC), that the Honble Supreme Court while dismissing the SLP had taken into account the facts of this case and, therefore, this judgement of the Honble Supreme Court is a binding precedent, that the Tribunal in the case of Vikram Cement reported in 2009 (242) ELT 545 (Tribunal-Delhi) had taken into account the judgement of the Honble Supreme Court in the case of Steel Authority of India Ltd. and had held that the welding electrodes are not eligible for cenvat credit either as inputs or as capital goods and in view of this and that in view of this, there is no infirmity in the impugned orders denying cenvat credit in respect of welding electrodes.
5.I have carefully considered the submissions from both the sides and perused the records. I find that Honble Chattisgarh High Court in the case of Ambuja Cement Eastern Ltd. (supra) after discussing the judgement of the Tribunal in the case of Steel Authority of India Ltd. (supra) and also the order of the Supreme Court dismissing the SLP filed by the SAIL has observed that the dismissal of SLP by the Supreme Court by a non-speaking order does not lay down any binding precedent in this case and has held that the welding electrodes used for repair and maintenance are eligible for cenvat credit. In this regard, para-21 and 22 and 23 of the judgement of the same are reproduced below:-
21.Shri Bhishma Kinger, learned? counsel for the respondents/revenue, vehemently argued that in the matter of SAIL, the Tribunal at Kolkata relying upon the decision in Jaypee Rewa Plant has held that Modvat credit on goods and welding electrodes etc. which are used for welding, repairing and maintenance of machineries, is not available under Rule 57A of the erstwhile Central Excise Rules, 1944. SAILS Special Leave Petition against the above order of Kolkata Tribunal has been further dismissed and therefore, the view taken in Jaypee Rewa Plant is impliedly affirmed by the Supreme Court.
We are unable to accept the aforesaid argument as we find that SLP against the decision of Kolkata Tribunal in SAIL has been summarily dismissed without any speaking order, whereas the Rajasthan High Court in Hindustan Zinc Ltd., after considering the Larger Bench decision of the Tribunal in Jaypee Rewa Plant, has observed that the matter has been decided by selectively referring to the decision of the Supreme Court in J.K. Cottons case, and decided the matter by omitting the very significant continuing next sentence. Paras 11 & 12 of Hindustan Zinc Ltd. have already been reproduced in the foregoing paragraph for ready reference.
22.Thus, decision in the matter of? Jaypee Rewa Plant is not a good law in view of above judgment of the Rajasthan High Court. That apart, the Madras High Court in India Cements Ltd. has held that the welding electrodes used for repairs and maintenance are covered under the definition of capital goods in terms of Rule 57Q. Similarly, in Birla Jute & Industries Ltd., also, the Delhi Tribunal held that Modvat credit is admissible for Electrodes and Calibration Gas Mixture (Welding equipments), but not admissible for explosives under Rule 57A of the Central Excise Rules, 1944, Civil appeals preferred by the revenue have been further dismissed by the Supreme Court.
It is settled law that refusing of special leave to file appeal by a non-speaking or speaking order does not attract the doctrine of merger, whereas where an award, appeal or revision is provided against the order passed by the Court, Tribunal or any other authority before a superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law, as held by the Supreme Court in Kunha Yammed.
23.On the basis of aforesaid? discussions, relying upon the decisions of the Rajasthan High Court in Hindustan Zinc Ltd., Madras High Court in India Cements Ltd., and Delhi Tribunal in Birla Jute & Industries Ltd., which have been, subsequently, affirmed by the Supreme Court, we allow both the appeals, set aside the impugned orders and answer the substantial question of law in favour of the appellant-assessee and hold that welding electrodes used in repairs and maintenance of plant and machinery are inputs as defined under Rule 2(g) of the Cenvat Credit Rules, 2002 and thus, entitled for Cenvat credit.
6.I also find that the Honble Rajasthan High Court in the case of Hindustan Zinc Ltd. reported in 2008 (228) ELT 517 had held that welding electrodes used for repair and maintenance of the parts and machinery are eligible for cenvat credit as capital goods and inputs. In view of the judgements of the two High Courts, I hold that the impugned orders denying cenvat credit in respect of welding electrodes used for repair and maintenance of the plant and machinery are not correct. The same are, therefore, set aside. The appeals are allowed.
(Rakesh Kumar)
Member (Technical)
Ckp.