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Judgment
The present appeals have been filed against the common Order of the Commissioner (Appeals), Siliguri dated 19.04.2018. The appellant No. 1 is a
manufacturer of Sponge Iron. The raw materials used by them are mainly coal, iron ore and dolomite. The appellant was availing the Cenvat credit of
duty paid on inputs and input services. The inputs on which credit was taken were mostly structural items and welding electrodes. Structural steel
items such as HR Plates, M.S. Channels, M.S. Beam, TMT Bar, CTD Bar, etc. and welding electrodes were used by them in the manufacture of
capital goods, and also components and accessories of capital goods which were further used in the manufacture of final product. Revenue sought to
disallow the Cenvat credit taken on these items and vide the impugned order, the Cenvat credit amounting to Rs.70,39,739/- was ordered to be
recovered along with interest and for imposition of penalty. The period of dispute is from December 2011 to March 2013 and from January 2014 to
March 2016 for which various periodical show cause notices were issued. The Adjudicating Authority disallowed the Cenvat credit vide the impugned
order on the ground that these were not inputs/capital goods and therefore, Cenvat credit taken thereon was inadmissible.
Shri S. Mohapatra, learned Authorized representative for the appellant inter alia stated as under :-
(i) That the issue relating to disallowance of credit on steel items have been in dispute for which periodical Show Cause Notices have been issued
from time to time. In respect of the said issues, this Tribunal has vide Final order No. FO/77567/2017 dated 17.10.2017 and Final Order No FO/77584
dated 18.10.2017 in the appellants own case has settled the issue in their favour and the same has attained finality. He prayed that the said decisions
will hold the field and the ratio laid down therein should be applied to ensure consistency and certainty in the tax position.
(ii) He relied on several decisions to support his contentions that even if steel items are used in the factory in or in relation to manufacture of final
products, credit would be legally admissible: Â
v CCE Vs. Gujarat Ambuja Cement Ltd. 2008 (230) E.L.T. 221 (H.P.) Â
v CCE Vs. Madras Aluminum Ltd., 2008 (226) ELT 342 (Mad.) Â
v Oswal Steel Vs. CCE 2006 (193) ELT 403 (P&H) Â
v CCE Vs. Zenith Papers2002 (146) ELT 518 (P&H) Â
v CCE vs. India Glycols Ltd. 2008 (229) E.L.T. 516 (Utt)
v CCE Vs. Prism Cement Ltd. 2006 (199) ELT 777 (MP) Â
v Vandana Global Ltd. Vs. Commissioner of C.Ex. &Cus. Raipur2018 (16) GSTL 462 (Chattisgarh) Â
v C.C.Ex. Lucknow VS. Mankarpur Chini Mills 2019 ( 267) ELT 889 Â
v Commissioner of CGST & Central Excise, Lucknow Vs. DSCL Sugar 2019 (367) ELT 836 (All)
(iii) He submitted that the Appellate Authority has erred in not accepting the Chartered Engineer’s certificate and that the very Show Cause
Notices, impugned herein, have been issued on a wrong presumption that the subject steel items could be used in construction of building structures.
The said allegation is not supported by any evidence and hence, the very foundation of the proceedings is based on presumptions and assumption,
which cannot be made the basis to deny the Credit. It is a settled law that Cenvat Credit is a beneficial piece of legislation, and the entitlement thereof
to the assessee should not be denied based on the presumed misusage when there is no contrary finding.
The learned Authorized Representative appearing for the respondent Revenue reiterated the findings of the order and said that credit has been
rightly denied. He accordingly prayed that the appeals filed by the assessee be rejected being devoid of any merit.
Heard both sides through video conferencing and perused the appeal records.
I find that the issue relating to availment of credit by appellant herein on the subject steel items has always been the subject matter of dispute
inasmuch notices have been periodically issued for denying the credit. I have perused the Final Order No.77584 of 2017 dated 18.10.2017 passed by
the Tribunal wherein the departmental appeal has been rejected with the following observation:
“3. I find that the Commissioner (Appeals) proceeded on the basis of the Chartered Engineer’s certificate and followed the user test
as settled by the Hon’ble Supreme Court. In any event, Revenue have not countered such evidence in their grounds of appeal except
reference of case laws. Hence, I do not find any reason to interfere with the order of the Commissioner (Appeals). Accordingly, the appeal
filed by the Revenue is rejected.â€
5.1 I also find that the learned Commissioner (Appeals) vide Order-in-Appeal No.123/BOL-CE/2020-21 dated 13.11.2020 in assessee’s own case
pertaining to the dispute for the period from January 2017 to June 2017 has made the following observations:-
“19. I also observe that the Hon’ble CESTAT, Kolkata in Respondent’s case on same issue under Excise Appeal no. 442 of
2010, set aside the Order-in-Original no. 18/Commr/Bol/10 dated 11.03.2010 passed by the Commissioner of Central Excise, Bolpur
denying the Cenvat Credit on steel structural fabrication, supports of plant & machinery, maintenance of Plant & Machinery, etc falling
under Capital Goods on the ground that various High Courts and Hon’ble Supreme Court have been taking consistent view regarding
these steel structures and their eligibility to Cenvat Credit, which is also being followed by the Tribunal in various decisions.
Further, I also observe that on the same issue pertaining to the period April 2016 to December 2016, the Order-in-Original no.
17/AC/CE/DGP-III/2018-19 dated 17.05.2019 dropped the demand and the same has been accepted by the Commissioner of CGST, Bolpur
on 07.06.2018.
In the present case, Respondent submitted that the structural items such as FIR/Coil, H.R. Plates, M.S. Angles, M.S. Channels. M.S.
Joist, etc were used by them in their factory for the purpose of relining of the blast furnace for production of Hot Metal and Pig Iron.
Further, the above items were used in the repair of Ductile Iron Pipe Plant and also for poking as “poking Rod†at the Blast Furnace
Tap Hole Area. At the tap, hole is opened by continuous poking and then the Hot Metal is tapped from the Blast Furnace. Ultimately, the
poking rod melts with the Hot Metal by completing the Metal Tapping Process. The Chartered Engineer in his certificate dated 08.01.2019
certified that MS Round, MS Channel, MS Joist, MS Angle, Welding Electrodes, etc was used for fabrication of different kinds of
machinery, its parts, during the period January 2017 to June 2017. As per the Annexure to the impugned Certificate, the above steel
materials and welding electrodes, etc were used for fabrication of Bag Filter & Burner Pipe and fitting for Sinter, ESP (Pollution sytem) for
Coke Oven, ESP (Pollution system), Heat Exchange, Casing Forma for ARC Furnace. This fact has not been disputed by the Revenue.
I find that the lower Adjudicating Authority passed the impugned order following the judicial discipline and after careful consideration,
evaluation and analysis of material facts, interpretation of statutory provisions and the decisions of the Higher Judicature on the same or
similar issue. Revenue has failed to bring any substantive arguments in the matter of law or material evidence to prove otherwise as the
issue of admissibility of Cenvat Credit of steel structures, etc for fabricating of parts and accessories of Capital Goods is no longer res
integra and decided by the Higher Judicature in plethora of cases. Applying the user test of ‘capital goods’ as enunciated by the
Hon’ble Supreme Court in the case of Rajasthan Spinning & Weaving Mills (Supra) and the decision of the Higher Judicature and the
factual matrix of the case, I am of the view that the order passed by the Lower Adjudicating Authority is in conformity with the extant
provisions of law and needs no interference. Hence, I am constrained to reject the present Appeal by the Revenue for lack of merit…..â€
5.2 Further, I find that in the similar dispute for the period April 2013 to December 2013, the learned Commissioner (Appeals), vide Order-in-Appeal
No.31-32/BOL/2017-18 dated 31.05.2017 has decided the case of the assessee in their favour.
On perusal of the impugned Show Cause Notices, I find that the Credit has been sought to be denied on subject steel items on presumption that
“ordinarily used for civil construction or construction of factory shedâ€. I agree with the submissions made by the appellant that credit has been
admittedly allowed by the Lower Adjudicating Authorities, as also upheld by the First Appellate Authority, the denial of credit in the instant case by the
same appellate authority would lead to uncertainty and cause serious prejudice to the interest of the assessee, if they are deprived of the beneficial
scheme of Cenvat Credit. In this regard, the observation made by the Tribunal in the case of Tata Steel Ltd vs. CCE, Jamshedpur 2016 (335) ELT
(Tri-Kol) is relevant which is extracted below:-
“4.4 Since the department has accepted the admissibility of Cenvat credit on rails and railway track materials involving the same
assessee i.e. M/s. SAIL, for subsequent period under the CCR, 2004 and identical issue is also involved in M/s. Tata Steel’s case,
therefore, adopting the principle of certainty and consistency in tax matters, in our view, the appellants are eligible to credit on rails and
railway track materials. Consequently, the discussion on the applicability of the said judgment to the present Cenvat Credit Rules, 2004 and
other contentions raised in these appeals would become more of academic in nature rather than resolving the dispute, hence not resorted
to…â€
In view of the above findings, I set aside the impugned orders and allow all the appeals filed by the assessee with consequential benefits, as per law.
(Order pronounced in the open court on 22 March 2021.)