Concrete sleepers used for laying railway line for movement of goods between plant facilities installed within factory premises; and JO trucks for movement of nitrogen and oxygen gas cylinders within factory, are eligible for Cenvat credit as ‘input’
CESTAT, NEW DELHI BENCH
Jindal Steel & Power Ltd.
Commissioner of Central Excise, Raipur
FINAL ORDER NO. 52441/2015
APPEAL NO. E/51036/2014 EX. (SM)
JULY 22, 2015
H.V. Ghirnikar, CA for the Appellant. Devender Singh, JCDR for the Respondent.
9. In view of above, I do not find any substance in the impugned order, and as such, the same is set aside and the appeal is allowed in favour of the appellant with consequential relief, if any, as per law.
1. This appeal is directed against the impugned order dated 21st November, 2013 passed by the Commissioner of Central Excise, Customs and Service Tax, Raipur wherein cenvat credit taken on JO Trucks and concrete sleepers have been denied to the appellant on the ground that the said disputed goods cannot be considered as either input or capital goods.
2. Ld. Chartered Accountant Shri H.V. Ghirnikar appearing for the appellant submits that the concrete sleepers had been used for laying railway line for movement of goods between the plant facilities installed within the factory premises. With regard to JO trucks, the submission of the ld. Consultant is that the said trucks are specially designed for movement of goods i.e. nitrogen and oxygen gas cylinders within the factory premises. He submits that ‘motor vehicle’ defined in section 2(28) of the Motor Vehicle Act, 1988 does not include the JO Trucks for the purpose of registration, since the said vehicle is only used inside the factory for movement of the goods. The ld. Consultant further submits that both the disputed goods are to be considered as input because the same are used in or in relation to manufacture of the final product within the factory and in absence of use of those disputed goods, even if the manufacture of final products are conceivable, but the same will not be commercially viable. Thus, according to the ld. Consultant, the disputed goods should qualify as input for the purpose of taking Cenvat credit by the appellant.
3. Per contra, Shri Devender Singh, the ld. JCDR appearing for the respondent submits that JO truck is categorised as ‘motor vehicle’ and as per the exclusion clause contained in Rule 2(k) of the Cenvat Credit Rules, 2004, Cenvat credit on the said item is not available to the appellant. With regard to concrete sleepers, the submissions of the ld. JCDR are that the said disputed goods are no way connected with the manufacture of the excisable goods by the appellant and as such, fall outside the purview of the definition of ‘input’ for the purpose of taking Cenvat credit. To substantiate his above stand, the ld. JCDR relies on the decision of this Tribunal in the case of India Cements Ltd. v. CCE 2010 (262) ELT 348 (Tri. – Chennai).
4. I have heard the ld. Counsel for both sides and perused the records.
5. I find from the impugned order at paragraph 8.7.2 that the cenvat credit on ‘JO Trucks’ have been denied to the appellant on the sole ground that the said trucks are motor vehicle on which cenvat credit is available only to the specified service provider and not to the manufacturer of the excisable goods. However, in the impugned order, it has been observed that the JO trucks are used by the appellant as material handling equipment. With regard to the concrete sleepers, the findings of the adjudicating authority are that the same are useable in the railway tracks and that laying the tracks cannot be considered as input in the manufacture of final product. He further observed that railway tracks cannot be considered as machine, machinery, plant, equipment, apparatus, tools or appliances, used for producing or processing of any goods or for brining out any change in any substance. Thus, both the disputed goods, according to the impugned order, are not eligible for cenvat credit.
6. The term input has been defined in Rule 2 (k) of the cenvat credit rules, 2004. As per the said definition, all goods used in the factory by the manufacturer of the final product are considered as ‘inputs’ for the purpose of availing the Cenvat benefit. The said definition keeps outside its purview certain goods, on which cenvat credit is not available to the manufacturer. The excluded items are light diesel oil, High Speed Diesel Oil or motor spirit (commonly known as petrol), construction material, capital goods, motor vehicles, goods used outside the factory and for personal use of the employees. The definition of input also excludes the goods which have no relationship whatsoever with the manufacture of final product.
7. On perusal of the definition of ‘input’ contained in Rule 2 (k) of the Rules, it reveals that the manufacturer is permitted to take cenvat credit on all goods used in the factory for manufacture of the final product. The goods on which cenvat credit is not permissible has been clearly spelt out in the exclusion clause of the definition of ‘input’. The JO trucks are not considered as motor vehicle as per the Section 2(28) of the Motor Vehicles Act, 1988, since the same are used only in a factory or in any other enclosed premises. In view of the definition under the Motor Vehicles Act, 1988, since JO Truck is not to be categorised as ‘motor vehicle’, the exclusion for vehicles provided in the definition of input will have no application and the appellant will be eligible to take cenvat credit on the JO Trucks, since the said specially designed trucks have been used within the factory for movement of goods between the different plant facilities, the fact of which has also been accepted in the impugned order that JO Trucks are used as material handling equipment by the appellant. With regard to concrete sleepers used for laying railway lines within the factory premises, I am of the considered opinion that the said item is not falling under the exclusion clause of the definition of input and as such by nature of its use and its participation in the manufacture/production of the excisable goods, the same should be considered as input for the purpose of taking cenvat credit. In this context, I rely on the judgment of Hon’ble Supreme Court delivered in the case of Collector of Central Excise v. Rajasthan State Chemical Works 1991 taxmann.com 24, wherein it has been held that process of handling/lifting/pumping/transportation of raw materials also a process in or in relation to manufacture, if integrally connected with further operations leading to manufacture of goods.
8. The decision of Tribunal in the case of India Cements Ltd. (supra) cited by the ld. JCDR is not applicable to the facts of the present case, inasmuch as, cenvat credit taken on concrete sleepers have been denied to the appellant on the ground that the same cannot be termed as capital goods. Since there is no discussion as to whether the concrete sleepers should be termed as inputs in the said decided case, the cited decision is distinguishable.