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IN THE HIGH COURT OF JUDICATURE AT MADRAS
T.S. Sivagnanam, R.N. Manjula, JJ.
M/s. Dalmia Cements (Bharat) Ltd. – Appellant
Versus
The Customs, Excise & Service Tax Appellate Tribunal, Chennai & Another – Respondents
Civil Miscellaneous Appeal No. 2735 of 2008
Decided On : 07-01-2021
Central Excise Tax Act - Challenge to Tribunal's order - CENVAT Credit Rules, 2004 - Summary: The court considered the applicability of CENVAT credit on capital goods used in cement manufacturing plants. It relied on previous decisions and held in favor of the assessee, allowing the CENVAT credit. The substantial questions of law were answered in favor of the assessee and against the revenue.
Fact of the Case:
The appellant challenged the order of the Tribunal regarding the denial of CENVAT credit on capital goods used in a cement manufacturing plant. The court considered previous decisions and found no merit in the appeal, dismissing it and answering the substantial questions of law in favor of the assessee.
Finding of the Court:
The court found no merit in the appeal and dismissed it, answering the substantial questions of law in favor of the assessee.
Issues: The issues revolved around the denial of CENVAT credit on capital goods used in a cement manufacturing plant and the applicability of relevant aspects such as mode of annexation, object of annexation, and beneficial enjoyment.
Ratio Decidendi: The court relied on previous decisions and held that the assessee was eligible for CENVAT credit on the capital goods used in the cement manufacturing plant.
Final Decision: The appeal was dismissed, and the substantial questions of law were answered in favor of the assessee.
JUDGMENT :
T.S. Sivagnanam, J.
(Prayer: 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.)
1. 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:
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?”
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.
“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 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 C
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