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Birla Cellulosic V/S Commissioner of Central Excise-Bharuch


Company & Directors' Information:- BIRLA CORPORATION LIMITED [Active] CIN = L01132WB1919PLC003334

    Appeal No. E/11992/2017 (Arising out of OIA No. VAD-Excus-004-APP-213/2017-18 Dated 21.07.2017 passed by Commissioner (Appeals) of Central Excise, Customs and Service Tax-Vadodara) and Order No. A/10234/2018

    Decided On, 19 January 2018

    At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad

    By, THE HONORABLE JUSTICE: DR. D.M. MISRA
    By, MEMBER

    For Petitioner: Dhaval Shah, Advocate And For Respondents: Sameer Chitkara, A.R.



Judgment Text


1. This is in appeal filed against OIA No. VAD-EXCUS-004-APP-213/2017-18 Dated 21.07.2017 passed by Commissioner (Appeals) of Central Excise, Customs and Service Tax-Vadodara.

2. Briefly stated the facts of the case are that the appellant was issued with the SCN dated 16.06.2015 alleging wrong availment and utilization of CENVAT credit during the period June 2010 to November 2014 in respect of M.S. Plate, S.S. Plate, H.R. Plate, Aluminium Coils, G.I. Earthing Strips etc., used in repairing of capital goods in the factory premises of the appellant. On adjudication, the demand was confirmed with interest and equal amount of penalty imposed. Aggrieved by the said order, the appellant filed an appeal before the Ld. Commissioner (Appeals), who in turn, rejected their appeal. Hence, the present appeal.

3. Ld. Advocate Shri J.C. Patel for the appellant submitted that M.S. Plate, S.S. Plate, H.R. Plate, Aluminium Coils, G.I. Earthing Strips etc., were used for repair and maintenance of their capital goods as defined under Rule 2(a) CCR, 2004 within the factory premises of the appellant. Hence, credit availed on these items are eligible under Rule 2(k) of CCR, 2004. In support of his contention the Ld. Advocate referred to the judgments of the cases of Kisan Sahkari Chini Mills Ltd. Vs. Commissioner of Central Excise, Lucknow : 2013 (292) ELT 394 (Tri.-Del.), Commissioner of Central Excise, Customs & Service tax, Visakhapatanam-I vs. Jindal Stainless Ltd. : 2016 (343) ELT 527 (Tri.-Bang.) and Sarjoo Sahkari Chini Mills Ltd. Vs. Commissioner of Central Excise, Lucknow 2009 (248) ELT 559 (Tri.-Del.).

4. The Ld. AR for the Revenue reiterated the findings of the Ld. Commissioner (Appeals).

5. Heard both sides and perused the records. I find that the issue to be decided is whether the M.S. Plate, S.S. Plate, H.R. Plate, Aluminium Coils, G.I. Earthing Strips etc., undisputedly used for the repair and maintenance of various capital goods, in the factory premises of the appellant are eligible to CENVAT credit under the definition of input as prescribed under Rule 2(k) of CCR, 2004. This issue has been considered by this Tribunal in Kissan Sahakari Chini Mills Ltd.s case (supra) after analysing the principle of law of this Tribunal observed as under:-

5. I have considered submissions from both the sides and perused the records. I find that the issue as to whether the goods used for repair and maintenance of plant and machinery are eligible for cenvat credit, stands decided in favour of the Appellant by Hon'ble Rajasthan High Court in the case of Hindustan Zinc Ltd. (supra) wherein Hon'ble High Court has held that MS/SS plates used in the workshop meant for repair and maintenance of the plant and machinery s would be liable for cenvat credit and also by the judgments of Hon'ble Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd. v. Commissioner of Central Excise (supra) and Hon'ble Karnataka High Court in the case of Commissioner of Central Excise v. Alfred Herbert (India) Ltd. (supra) wherein Hon'ble High Court have held that the inputs used for repair and maintenance of plant and machinery would be eligible for cenvat credit. The learned departmental representative has cited a contrary judgment of Hon'ble High Court of Andhra Pradesh, in the case of Sree Rayalaseema Hi-Strength Hypo Ltd. v. Commissioner of Customs & Central Excise, Tirupati reported in : 2012 (278) E.L.T. 167. Since three High Courts as mentioned above, have held that the inputs used for repair and maintenance of plant and machinery are eligible for cenvat credit, I am of the view that it is these judgments which have to be followed.

5.2 The Apex Court in the case of J.K. Cotton SPG & WVG Mills Co. Ltd. v. Sales Tax Office reported in 1997 (91) E.L.T. 534 (S.C.), interpreting the scope of the expression - in the manufacture of goods in Section 8(3)(C) of the Central Sales Tax Act, 1956 has in para 9 of the judgment held that this expression would cover the goods used in any process/activity which is so integrally connected to the ultimate manufacture of goods without that process or activity, even if theoretically possible, is commercially inexpedient. The scope of the expression used in the definition of input in Rule 2(k) of the Cenvat Credit Rules, 2004 - used in or in relation to manufacture of final products, whether directly or indirectly and whether contained the final products or not is much wider than the scope of the expression used in manufacture of and therefore the expression-used in or in relation to manufacture of final product, whether directly or indirectly in the definition of input in Rule 2(2) would cover all the goods whose use is commercially expedient in manufacture of final products.

5.3 Repair and maintenance of plant and machinery is an activity without which smooth manufacturing is not possible. Commercially, manufacturing activity is not possible with malfunctioning machines, and leaking tanks, pipes and tubes. Therefore the activity of repair and maintenance of plant and machinery is an activity whic

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h has direct nexus with manufacture of final products and the goods used in this activity would be eligible for Cenvat credit. For eligibility of an input for Cenvat credit what is relevant is whether the activity in which that input is used has nexus with the manufacture of final product and the nexus has to be determined on the basis of criteria as to whether that activity is commercially essential for manufacture of the final products. 6. In the result, the impugned order is set-aside and the appeal is allowed with consequential relief, if any, as per law.
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