Madras High Court
M/S.Tamilnadu Newsprint & Papers ... vs The Commissioner Of Central ... on 17 February, 2021
C.M.A.No.1466 of 2014
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 17.02.2021
CORAM
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM
and
THE HONOURABLE MS.JUSTICE R.N.MANJULA
C.M.A.No.1466 of 2014
and
M.P.No.1 of 2014
M/s.Tamilnadu Newsprint & Papers Ltd.,
Kagithapuram,
Karur-639 136. .. Appellant/Appellant
-vs-
The Commissioner of Central Excise,
No.1, Williams Road, Cantonment,
Tiruchirapalli. .. Respondent/Respondent
Appeal under Section 35G of the Central Excise Act, 1944 against the
order dated 11.06.2012 made in Final Order No.633 of 2012 on the file of
the Customs, Excise and Service Tax Appellate Tribunal, South Zonal
Bench, Chennai.
For Appellant : Mr.M.N.Bharathi
for Mr.K.Magesh
For Respondent : Ms.R.Hemalatha,
Senior Standing Counsel
1/12
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C.M.A.No.1466 of 2014
JUDGMENT
(Judgment of the Court was delivered by T.S.Sivagnanam, J.)
This appeal, by the appellant/assessee, filed under Section 35G of the
Central Excise Act, 1944, is directed against the order dated 11.06.2012, in
Final Order No.633 of 2012 on the file of the Customs, Excise and Service
Tax Appellate Tribunal, South Zonal Bench, Chennai.
2.The appeal was admitted, on 17.07.2014, on the following
substantial questions of law:-
“1.Whether the order of the Tribunal placing reliance
on Vandana Global to disallow the claim of CENVAT on
M.S.Angles, M.S.Joint Beams and TOR Steel is
unsustainable in view of the fact that it has lost its value as a
precedent in view of the contrary view expressed by the
Supreme Court in Central Excise, Jaipur, vs. Rajasthan
Spinning & Weaving Mills Ltd., case; and
2.Whether the respondents are right in disallowing
credit on M.S.Angles, M.S.Joint Beams and TOR Steel on
the ground that they do not qualify as capital goods
inasmuch as it is contrary to the decision of the Supreme
Court in Central Excise, Jaipur vs. Rajasthan Spinning &
Weaving Mills Ltd., case.”
3.Heard Mr.M.N.Bharathi, learned counsel for Mr.K.Magesh, learned
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C.M.A.No.1466 of 2014
counsel for the appellant/assessee and Ms.R.Hemalatha, learned Senior
Standing Counsel for the respondent/Revenue.
4.The substantial questions of law, which have been framed for
consideration in this appeal, have been answered in favour of the assessee in
the case of Commissioner of Central Excise vs. India Cements Ltd., [2020
(9) TMI 1158 (Madras)].
5.We had an occasion to consider similar questions in the case of
Dalmia Cements (Bharat) Ltd. vs. CESTAT, Chennai & Ors., [(2021 (1)
TMI 927 (Madras)], wherein the civil miscellaneous appeal filed by the
assessee was allowed. The operative portions of the judgment read as
follows:-
“4. We need not labour much to answer the substantial
questions of law framed for consideration in the light of the recent
decision of the Hon'ble Division Bench of this Court in the case of
CCE Vs. India Cements Ltd. [CMA.No.1629 of 2016 dated
30.9.2020] wherein an identical question was considered and the
only difference being that the case arose under the CENVAT Credit
Rules, which subsequently stood substituted by the MODVAT
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C.M.A.No.1466 of 2014
Rules. This aspect was also taken note of and the substantial
questions of law were answered against the Revenue by the said
judgment.
5. The relevant portions in the said judgment read as
hereunder:
“2. The following substantial questions of law were
sought to be raised for consideration:
“(i) Whether the Tribunal misdirected itself and
thereby fell into an error in holding that CENVAT credit is
admissible on the capital goods which were not specified
in the Rule 2(a)(A) of CENVAT Credit Rules, 2004? (being
contrary to the ratio laid down by the Apex Court in
Vikram Cement Vs. CCE, Indore reported in 2005 (187)
ELT 145 SC. [Appeal (Civil) No. 1197/2005 dated
24/8/2005]?
(ii) Whether the Tribunal was justified in holding
that CENVAT credit is admissible on Construction
materials (viz., Cement, MS Angles, MS Plates, MS
Channels and HR Sheets etc), which are used for civil
construction activity as “Capital Goods“ eligible for
CENVAT Credit in terms of Rule 2(a)(A) of sub clauses
from (i) to (vii) of CENVAT Credit Rules, 2004 as it stood
at the relevant time?
(iii) Whether the Tribunal committed an error of
law in not appreciating the Legislative Intent in insertion
of ?but shall not include cement, angles, channels,
Centrally Twisted Deform bar (CTD) or Thermo
Mechanically Treated bar (TMT) and other used for
construction of factory shed. buildings or laying
foundation or making structures for support of capital
goods? vide Not.No.16/2009-C.E (N.T) dated 7/7/2009
being clarificatory in view of already existing explanation
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C.M.A.No.1466 of 2014
2 to Sec.2 (k) of CENVAT Credit Rules, 2004 and
therefore, operates retrospectively?”
3. The Hon'ble Supreme Court with reference to
availing of Cenvat Credit under the new Rule 2004 which
substituted the earlier Modvat Rules, clearly held in para
25 of the Judgment which is quoted below that the
Cenvat Rules which is in effect substitutes the Modvat
Rules and the decision of the Hon'ble Supreme Court in
Jaypee Rewa Cement case would continue to apply and
the decision of the Supreme Court in the case of
J.K.Udaipur Udyog Limited holding to the contrary was no
longer a good law:-
“25. In our opinion the doubt expressed by the
referring Bench about the correctness of the decision in
CCE v. J.K.Udaipur Udyog Limited (supra) was well
founded. Having regard to the fact that the Cenvat Rules
in effect substitute the Modvat Rules, the decision in
Jaypee Rewa Cement would continue to apply. The
decision in Commissioner of Central Excise v.
J.K.Udaipur Udyog Limited (supra) holding to the
contrary is, in our opinion, not good law. The reference is
answered accordingly. All the appeals and special leave
petitions will now be listed for being disposed of in the
light of this judgment.”
4. Thus following the said judgment, the Madras
High Court, in at least four cases of the Assessee has
decided that Cenvat Credit in respect of capital goods like
Structural Steel items like M.S.Plates, Angles, Channels
and HR Sheets used for civil construction activity/ erection
of machineries shall be allowed under the Cenvat Rules,
2004.
5. In our considered opinion, the matter is no
longer res integra and the learned Tribunal has rightly
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C.M.A.No.1466 of 2014
followed the decisions and held in favour of the Assessee.
The relevant portion of the Tribunal's order in this regard
is quoted below for ready reference:-
“4 . After hearing the submissions of both sides,
we find that the short issue in this case relates to
availment of cenvat credit on OPC cement, MS plates, MS
beam, MS Angle, MS channels, MS sheets, M.S.Flat, TMT
Rod and TOR Rod which are used for the construction of
their “Dry Process Cement Manufacturing Plant“. On
perusal of records, and the OIO, we find that credit was
denied only on the ground that these items were used in
the construction of the cement plant.
Adjudicating authority has denied credit on the
ground that the term “plant“ is not defined as “capital
goods“ in the CCR. We find that on an identical issue of
the same appellant, this Tribunal in two different appeals
had already allowed the appeals and the Revenue
preferred C.M.As. against the Tribunal-s order. The
Honble Madras High Court in both the orders in the case
of CCE Trichy Vs India Cements Ltd. 2014 (305) ELT 558
(Mad.), and CCE & Service Tax Vs India Cements Ltd.
2014 (310) ELT 636 (Mad.) had dismissed the Revenue's
appeals.
The relevant paragraphs of the High Court's order
reported in 2014 (305) ELT 558 (Mad.) are reproduced as
under:
“7. Heard learned Standing Counsel appearing for
the Revenue and the learned counsel appearing for the
assessee and perused the materials placed before this
Court.
8. Even though Learned Standing counsel
appearing for the Revenue submitted that the judgment
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C.M.A.No.1466 of 2014
in the assessee's own case reported in AIT-2011-358-HC
= 2012 (285) E.L.T. 341 (Mad.) (The Commissioner of
Central Excise v. M/s. India Cements Limited) had been
appealed against, as of today, there are no details; in any
event, the fact, herein is that the Revenue does not
controvert the facts found by the Assistant Commissioner
that the impugned goods were used for fabrication of
structurals to support various machines like crusher, kiln,
hoppers, pre-heaters conveyor system, etc. and that
without these structurals, the machinery could not be
erected and would not function.
9. In the decision reported in AIT-2011- 358-HC =
2012 (285) E.L.T. 341 (Mad.) (The Commissioner of
Central Excise v. Ms. India Cements Limited), pointing out
to Rule 57Q and the interpretation placed by the Apex
Court in the decision reported in 2010 (255) E.L.T. 481
(Commissioner of Central Excise, Jaipur v. Rajasthan
Spinning & Weaving Mills Ltd.) and in particular
Paragraph. Nos. 12 and 13, wherein the Apex Court had
applied the user test by following the Jawahar Mills's case,
this Court, held that steel plates and M.S. Channels used
in the fabrication of chimney would fall within the ambit of
capital goods?
In the face of this decision in the assessee's own
case there being no new circumstance or decision in
favour or the Revenue, we do not find any good ground to
take a different view herein too.
10. As far as the reliance placed by the Revenue
on the decision reported in 2011 (270) ELT 465 (SC)
(Saraswati Sugar Mills v. Commissioner of C.Ex.,
Delhi-III) is concerned, we do not think that, the said
decision would be of any assistance to the Revenue,
considering the factual finding by the Tribunal therein in
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C.M.A.No.1466 of 2014
the decided case that the machineries purchased by the
assessee were machineries themselves. Thus, after
referring to the decision reported in 2010 (255) ELT 481
(Commissioner of Central Excise, Jaipur v.
Rajasthan Spinning & Weaving Mills Ltd.), the Apex
Court held that in view of the findings rendered by the
Tribunal that the machineries were complete and having
regard to the meaning of the expression “components/
parts“, with reference to the particular industry in
question, the Apex Court rejected the appeal filed by the
assessee.
11. Thus going by the factual finding, which are
distinguishable from the facts found by the Authorities
below in the case on hand, we have no hesitation in
rejecting the Revenue's appeal, thereby confirming the
order of the Tribunal.
12. Learned Standing Counsel appearing for the
Revenue pointed out that, the Tribunal had merely passed
a cryptic order by referring to the earlier decisions. We do
not think that this would in any manner prejudice the
case of the Revenue, given the fact that on the identical
set of facts, the assessee's own case was considered by
this Court and by following the decision reported in 2010
(255) ELT 481 (Commissioner of Central Excise,
Jaipur v Rajasthan Spinning & Weaving Mills Ltd.),
the Revenue's appeal was also rejected. In the
circumstances, this Civil Miscellaneous Appeal is
dismissed. No costs. Consequently, C.M.P. No.16107 of
2005 is also dismissed.”
6. Further, we find, the Madras High Court by
relying their own order reported in 2014 (310) ELT 636
(Mad.) again dismissed the C.M.A. filed by Revenue and
upheld the Tribunal-s order. The Hon'ble High Court in a
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C.M.A.No.1466 of 2014
recent decision reported in 2015 (321) ELT 209 (Mad.) on
an identical issue had allowed the C.M.A. filed by the very
same appellant. The relevant portion of this Hon'ble
Madras High Court order is reproduced as under :
'13. The present appeal is also in respect of the
very same assessee and therefore we find no
distinguishable fact or issue contrary to the earlier
decision of this court.
14. It is relevant to note that this Court in the
decision reported in 2014-TIOL-1185-HMad-CX = 2014
(310) E.L.T. 636 (Mad.) in respect of the very same
assessee in C.M.A. No.1265 of 2014, following the
abovesaid decision of this Court, dismissed the appeal
filed by the Revenue.
15. Accordingly, following the principles laid down
in the decision reported in 2010 (255) E.L.T, 481
(Commissioner of Central Excise, Jaipur v. Rajasthan
Spinning & Weaving Mills Ltd.) and the earlier decisions of
this Court in C.M.A.No.3101 of 2005, dated 13-12-2012
and C.M.A.No.1265 of 2014, dated 10.7.2014, we are
inclined to allow the appeal, thereby set aside the order of
the Tribunal. Accordir1gly, this civil miscellaneous appeal
stands allowed. No costs. Consequently, M.P.No.1 of 2011
is closed.'
7. Respectfully following the three Honble High
Court decisions in the appellant's own case cited supra,
and also maintaining this Tribunal's order in the case of
Dalmia Cements (Bharath) Ltd. Vs CCE Trichy (supra),
holding that immovability is not a criteria for denial of
Cenvat Credit, we hold that appellants are eligible for
Cenvat Credit on the capital goods used in “Dry Process
Cement Manufacturing Plant“. Accordingly, the impugned
order is set aside and the appeal is allowed.”
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C.M.A.No.1466 of 2014
6. After having heard the learned counsels for both
sides and perused the order passed by the Tribunal, which
is extracted above, we do not find any merit in the
present Appeal and the same is liable to be dismissed.
Accordingly, it is dismissed. The substantial questions of
law are answered in favour of the Assessee and against
the Revenue.”
6. Following the said decision, the above civil miscellaneous
appeal is allowed and the order passed by the Tribunal is set aside.
The substantial questions of law are answered in favour of the
appellant/assessee. No costs.”
6.Thus, following the above decisions, this civil miscellaneous appeal
is allowed and the order passed by the Tribunal dated 11.06.2012, is set
aside. The substantial questions of law are answered in favour of the
assessee. No costs. Consequently, connected miscellaneous petition is
closed.
(T.S.S., J.) (R.N.M., J.)
17.02.2021
Index: Yes/ No
Speaking Order : Yes/ No
abr
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C.M.A.No.1466 of 2014
To
1.The Commissioner of Central Excise,
No.1, Williams Road, Cantonment,
Tiruchirapalli.
2.The Customs, Excise and Service Tax Appellate Tribunal,
Shastri Bhawan Annexe, 1st Floor,
26, Haddows Road, Chennai.
https://www.mhc.tn.gov.in/judis/
C.M.A.No.1466 of 2014
T.S.Sivagnanam, J.
and
R.N.Manjula, J.
(abr)
C.M.A.No.1466 of 2014
17.02.2021
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