1. The present appeal is directed against the impugned order dated 1.2.2013 passed by the Commissioner (A) whereby the Commissioner (A) has partially allowed the appeal of the appellant.
2. Briefly the facts of the present case are that the appellants are engaged in the manufacture of paper and paperboard falling under Chapter 48 of Central Excise Tariff Act, 1985 and are availing and utilizing CENVAT credit on inputs, capital goods and input services. Department noticed that the appellant had wrongly taken cenvat credit for the period 3/2009 to 12/2009 on paper adhesive tapes, gland packing, MS plates, chequered plate, MS channels, MS beam, MS angle, Aluminium rolled products, aluminium profiles, aluminium toughened sheets, MV parts, etc., falling under Chapter Heading No. 48, 68, 72, 73, 76 and 87 of the Central Excise Tariff Act, 1985 as capital goods. It was also found that the Education Cess had been calculated @ 3% instead of 2% and further taken credit two times in respect of Invoice No. 691. Total wrongly availed credit was calculated as Rs. 6,33,342/- out of which the appellant voluntarily reversed Rs. 2,07,872/-. The appellant furnished the details of credit taken of Rs. 29,477/- during the period from November 2009 to September 2010. It appeared that the paper adhesive tapes, gland packing, MS plates, chequered plate, MS channels, MS beam, MS angle, aluminium rolled products, aluminium profiles, aluminium toughened sheets, MV parts, etc., falling under Chapter Heading No. 48, 68, 72, 73, 76 and 87 of the Central Excise Tariff Act, 1985 do not fall under the definition of capital goods and cannot be considered as parts/components of goods falling under Chapter 82, 84, 85 or 90 or Pollution Control Equipments. Since it appeared that the appellant had availed the cenvat credit wrongly, a show cause notice was issued and vide the impugned Order-in-Original, ordered recovery of wrongly availed Cenvat Credit of Rs. 6,62,819/- with interest and for appropriating an amount of Rs. 2,07,871/- voluntarily reversed by the appellant towards the demand. The lower adjudicating authority imposed equal penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944. He also held that the items on which credit had been taken wrongly are liable for confiscation under Rule 15 of Cenvat Credit Rules, 2004 and gave an option to pay a redemption fine of Rs. 50,000/- in lieu of confiscation. Aggrieved by the Order-in-Original, the appellant filed appeal before the Commissioner (A) who partially allowed the appeal of the appellant and held that appellant is eligible to avail the CENVAT credit in respect of items as mentioned in para 14 of the decision of the Commissioner. The confiscation and redemption fine imposed by the lower adjudicating authority was also set aside by the Commissioner (A), hence the present appeal.
3. Heard both the parties and perused the records.
4. The learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed by misconstruing the definition of capital goods and also against the binding judicial precedents on the same issue. She further submitted that the items on which credit has been availed are used only as components of various plants/machinery if not as capital goods, the appellant should be allowed to take credit on these items in the category of inputs. She further submitted that the appellant had used the item 1 to 18 and 20 to 23 of the List i.e., MS Plates, chequered plates, MS channels, MS angles, MS beams, joint (beam) and hand rails are used in making platforms and ladders, which is operational component of 230 TDP Rotary Kiln falling under CSH 8417. Sl. No. 27 is part of Ash silo of AFBC Boilder falling under 8402 and Sl. No. 31 & 32 are electric earthing plates of the fibre lines and Sl. No. 37, 42 to 44 are CR/SS sheets, FM plates, CC trap sheets are used as component of 11 TPD chlorine dioxide plant falling under CSH 8419. Sl. No. 33 to 36, 45 to 49 aluminium sheets CR coils are used as ducting insulating colding component of fan of paper machine, VI falling under CSH 8439. Sl. No. 38 to 41 are MS Angles and MS channels are used as component of paper machines VI CSH 8439. Item No. 50 i.e., fans has been used as component in boiler falling under Chapter 8402 and Sl. No. 29 is the gland packing of pipes falling under subheading 6812 to withstand the heat used in the pulp mill falling under CSH 8441. She further submitted that 230 TDP Rotary Kiln was classifiable under 8417, 11 TDP chlorine dioxide plant falling under Chapter 8419 and fibre line falling under 8419 and AFBC boiler falling under heading 8402. She also submitted that these items are components and spares and accessories of the goods falling under Chapter 84 and are covered in the definition of capital goods on which the credit was availed. She also produced the literature pertaining to 230 TPD rotary kiln as well as 11 TPD chlorine dioxide plant to prove that all these items have been used for providing support to this rotary kiln and chloride oxide plant without which the main machinery cannot function. She further submitted that all these items on which CENVAT credit has been denied are parts of platform and ladder which are operational component of 230 TPD rotary kiln falling under Heading 8417 as component of capital goods. She also submitted that item Heading 13(b) are components used in the fibre line which is capital goods and is an essential part of the paper manufacturing plant of the appellant. In support of her submission, she relied upon the following decisions.
(i) CCE, Raipur vs. Hi-Tech Power & Steel Ltd : 2015 (315) ELT 428 (Tri.-Del.)
(ii) CCE, Jalandhar vs. Pioneer Agro Extracts Ltd.: 2008 (224) ELT 431 (Tri.-Del.)
(iii) CCE, Jalandhar vs. Pioneer Agro Extracts Ltd.: 2008 (230) ELT 597 (P & H)
(iv) Bellary Steel & Alloys Ltd. vs. CCE, Belgaum : 2005 (180) ELT 92 (Tri.-Bang.)
(v) Mukand Ltd. vs. CCE, Belgaum : 2005 (182) ELT 61 (Tri.-Bang.)
(vi) CCE, Guntur vs. Madras Cements Ltd : 2006 (203) ELT 605 (Tri.-Bang.)
She also submitted that the entire demand is time barred as the show-cause notice was issued on 3.2.2011 for the period 3/2009 to 12/2009 and there is no suppression in the present case and therefore extended period cannot be invoked and the entire demand is barred by limitation.
5. On the other hand, the learned AR reiterated the findings of the impugned order.
6. After considering the submissions of both the parties and perusal of the material, I find that the MS plates, electrical plates, MS channels, MS angles, MS beams, joists, beams, heat rails were used in making platforms and ladders, which is operational component of 230 TDP Rotary Kiln falling under 8417 and they were also used as component as part of platform and ladder which was operational component of fibre line falling under chapter heading 8439. Once it is admitted that these items are used as components for making platforms and ladders which were operational components of 230 TDP Rotary Kiln,
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I find no reason to disallow the credit on these items. Further in the case of Commissioner of Customs and Central Excise, Bhopal vs. Prakash Industries Ltd., it has been held that the angles, channels, joists, beams used in the manufacture of support structure of various machineries, sheds, platforms walkways, galleries, staircases without which the machinery cannot run and the CENVAT credit was held to be entitled to the appellant. Considering the various case laws cited supra as well as the uses of components as operational component of 230 TDP Rotary Kiln and fibre line, I am of the view that the appellant is entitled to CENVAT credit on these items and therefore to that extent, I set aside the impugned order and allow the appeal of the appellant with consequential relief, if any.