Madras High Court
M/S.Dalmia Cements (Bharat) vs The Customs on 7 January, 2021
CMA.No.2735 of 2008
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 07.1.2021
CORAM
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM
and
THE HONOURABLE MS.JUSTICE R.N.MANJULA
Civil Miscellaneous Appeal No.2735 of 2008
M/s.Dalmia Cements (Bharat)
Ltd., rep.by its General Manager
(Legal) Dr.Kishore Bharani ...Appellant
Vs
1.The Customs, Excise & Service
Tax Appellate Tribunal, Shastri
Bhavan Annex, No.26, Haddows
Road, Chennai-6.
2.The Commissioner of Central Excise
(Appeals), No.1, Williams Road,
Cantonment, Trichy-1.
3.The Assistant Commissioner of
Central Excise, Central Excise 'I'
Division, Trichy. ...Respondents
APPEAL under Section 35G of the Central Excise Act, 1944
against the order dated 29.5.2008 passed by the Customs, Excise and
Service Tax Appellate Tribunal, Chennai made in Final Order No. 517/
2008.
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CMA.No.2735 of 2008
For Appellant: Mr.G.RM.Palaniappan for
Mr.S.Muthuvenkatraman
For Respondents 2 & 3 : Mr.V.Sundareswaran, SSC
Judgment was delivered by T.S.SIVAGNANAM,J
This appeal has been filed by the assessee under Section 35G of
the Central Excise Tax Act, 1944 ('the Act' for brevity) challenging the
order dated 29.5.2008 made in Final Order No.517/2008 on the file of
the Customs, Excise and Service Tax Appellate Tribunal, Chennai ('the
Tribunal' for brevity).
2. The appeal was admitted on 05.9.2008 on the following
substantial questions of law:
“1. Whether the order of the Tribunal is
vitiated inasmuch as it fails to take into
account relevant aspects viz.
a. mode of annexation
b. object of annexation
c. beneficial enjoyment and thus stands
vitiated ? and
2. Whether the first respondent ought to
have allowed credit under the Capital Goods
Scheme if not under the Inputs Scheme?”
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CMA.No.2735 of 2008
3. We have heard Mr.G.RM.Palaniappan, learned counsel for the
appellant and Mr.V.Sundareswaran, learned Senior Standing Counsel
appearing for the Department.
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 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
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CMA.No.2735 of 2008
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 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
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CMA.No.2735 of 2008
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
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CMA.No.2735 of 2008
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 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
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CMA.No.2735 of 2008
C.M.As. against the Tribunal-s order. The Hon-
ble 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 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
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CMA.No.2735 of 2008
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 the decided case that the
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CMA.No.2735 of 2008
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.
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CMA.No.2735 of 2008
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
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-H-
Mad-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
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CMA.No.2735 of 2008
(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 Hon-
ble 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.”
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
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CMA.No.2735 of 2008
Assessee and against the Revenue.”
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CMA.No.2735 of 2008
T.S.SIVAGNANAM,J
AND
R.N.MANJULA,J
RS
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.
07.1.2021
To
1.The Customs, Excise & Service Tax Appellate Tribunal, Shastri
Bhavan Annex, No.26, Haddows Road, Chennai-6.
2.The Commissioner of Central Excise (Appeals), No.1, Williams Road,
Cantonment, Trichy-1.
3.The Assistant Commissioner of Central Excise, Central Excise 'I'
Division, Trichy.
CMA.No.2735 of 2008
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