The duty paid on steel and cement used for the construction of storage tank and pollution control equipment could be availed of by the assessee as cenvat credit, as per Rule 2(a) of Cenvat Credit Rules, 2004.

N. Kumar, J.—This appeal is by the revenue challenging the order passed by the Tribunal which held that the steel and cement use in the manufacture of storage tank for which the assessee is entitled to Cenvat Credit on steel and cement purchased for constructing a storage tank. The assessee M/s. S.L.R. Steels Limited is carrying on the business of manufacturing pig iron, G. Slag, Coke and Fuel. It holds Central Excise Registration certificate. A show case notice came to be issued on 30-6-2005 alleging that they have irregularly availed Cenvat credit of Rs. 21,34,251/- on ineligible items like steel, cement etc. and they were asked to a show cause why the said amount should not be recovered from them under Rule 11/14 of the Cenvat Credit Rules, 2002 and 2004 respectively read with Section 11A of the Central Excise Act, 1944. The assessee filed his objections pointing out that the said material was purchased and used as an input in construction of pollution control equipments as well as storage tanks. The Additional Commissioner of Excise accepting the case of the assessee dropped the proceedings. Aggrieved by the said order, the revenue preferred an appeal to the Commissioner of Central Excise. The appellate authority held that cement and steel used for manufacture of the storage tank which is an immovable property is not capable of being bought and sold in the market and hence, are non-excisable goods. No credit of duty paid on any inputs used for such non-excisable goods is admissible in view of the provisions of Rule 6(1) of Cenvat Credit Rules, 2002/2004. Therefore, he allowed the departmental, appeal and confirmed the demand for reversal of wrongly availed capital goods credit, along with interest and penalty. Aggrieved by the said order, the assessee preferred an appeal to the Tribunal. The Tribunal held that the cement and steel used by the assessee for the purpose of construct Iron/Coke, storage tank, gas storage tanks are capital goods. Steel and cement purchased was an input in the manufacture/ construction of the said capital goods. Therefore, the inputs having been used for the construction of storage tank and pollution control equipment as held by the Apex Court in the case of Commissioner of Central Excise Coimbatore and Others Vs. Jawahar Mills Ltd. and Others, AIR 2001 SC 2500, the assessee is entitled to Cenvat credit. Therefore, the order of the appellate authority was set aside and the order of the assessing authority was restored. Aggrieved by the said order, the revenue is in appeal.

2. Learned counsel for the revenue assailing the impugned order contends that the assessee is not in the business of manufacture of storage tanks. Storage tank is an immovable property. It is not excisable. In those circumstances, the duty paid on steel and cement which is used for the construction/manufacture of storage tank cannot be availed by the assessee as cenvat credit. Infact, the definition of "input" in particular, Explanation 2 as amended in 2009 supports his contention. Therefore, he submits the order passed by the tribunal is erroneous and the appellate authority's order has to be restored.

3. Per contra, learned counsel for the assessee contended the material on record clearly establishes that the steel and cement was purchased for construction of storage tank and also used for pollution control equipments which fall within the definition of "capital goods" and therefore, the Tribunal was justified in granting the said relief. No case for interference is made out.

4. In those circumstances, the substantial question which arises for our consideration in this appeal is "Whether the duty paid on steel and cement which was used for the construction of storage tank and pollution control equipment could be availed of by the assessee as cenvat credit?

5. In order to answer this question, it is necessary to look into the definition of capital goods as contained in the Cenvat Credit Rules, 2004 which reads as under :

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