HIGH COURT OF CHHATTISGARH AT BILASPUR Writ Petition _(_C) No.6048 of 2009 PETITIONER: M/s Shri Nakoda lspat Ltd. RESPONDENT: Versus Commissioner of Central Excise POST FOR ORDER ON ? 42-2009 / ///J‘ ~y., 7, S - . i Dhirendra M‘Sh‘rag Judge wfb \ RESPONDENT: Present: Shri Arohi BhaH Shri Bhishma K N Dhirendra Mishra J. No.109, M/s Shri Nakoda Phase-H, lspat lndustrial Ltd.,‘P!ot Chhattisgarh Growth Centre, Siltara, Raipur, Versus Tax Commissioner Bhawan, of Dhamtari Centra! Excise Road, Raipur 492001, Chhattisgarh the Constitution of India) (Writ Petition under Article 226/227 of a, counsel for the petitio inger, counsel for the re ner. spondent ORDER (Passed on OEEDecember, 2009) gay period up to December, 2005; for January, 2606 to February, 2007 and March, 2007 to February, 2008. 3. A team from Central Excise Department, Raipur headquarter, again conducted audit of books of account of the petitioner for the year July, 2004 to March, 2007 and found that Cenvat Credit availed by the petitioner herein against the structurai iron and steel items were not admissibie since they do not fall under the head of inputs or capital é i goods. The petitioner was asked to furnish detaiis of the Cenvat Credit availed for the aforesaid period whereupon the petitioner furnished all the details. Thereafter, a show cause notice dated 7‘“ July, 2008 (Annexure—PI2) was issued. The petitioner replied to the above show cause notice vide Annexure-P/3. The Commissioner, Customs and Central Excise cancelled/ disallowed Cenvat Crecdit amounting to Rs.1,23,72,352/—, educational cess of Rs.2,04,759/— and secondary and higher education cess amounting to Rs.22,151/— and ordered recovery of the said duty with interest under Rule 14 of the Cenvat Credit Rules, 2004 (for short ‘the Rules) read with section 11-AB of the Central Excise Act, 1944 (for short ‘the Act’) and penalty of Rs.1 ,25,99,362/- under Section 11-AC of the Act read with Rule 15(2) of the Rules, was imposed vide order dated 17-12—2008 (Annexure- P/4). 4. The petitioner preferred an appeal before the CESTAT vide Annexure— P/5 whereupon the CESTAT vide impugned order of Annexure—P/1 partly allowed the stay applicatiOn to the extent of claim of interest and penalty amount and dismissed the application as far as claim f&e // AQQ) bl. J. duty amount and directed the petitioner to deposit amount of duty demanded by the Commissioner vide Annexure-P/4. 5. Learned counsel for the petitioner submitted that the petitioner has availed Cenvat Credit benefit only against the structural items and not against the items used in building/construction and civil works. The show cause notice issued by the Commissioner, Central Excise was barred by limitation as provided under Section 11—A of the Act, as the “r same was received after maximum Iimit of one year of the period of assessment. For extending the period of one year limitation as provided under proviso to Section 11-A, allegation of fraud, collusion and any other willful mis—statement or suppression of facts or contravention of any of the provisions of the Act or Rules is an essential ingredient. However, in the instant case, all the relevant documents and records were available before the Commissioner, Central Excise, Raipur, during audit, which was conducted by the officers of the department of the petitioner company till 2005 and thereafter till date. t: 6. The fact that the petitioner claimed Cenvat Credit against the aforesaid items was well withinxthe knowledge of the department. Learned Commissioner has rejected the objection of the petitioner based on the decision of the Larger Bench of the Tribunal in the case of Nizam Sugar Factory Versus CCE {1999 (1 14) ELT 429 (Tri-LB)} wherein it has been held by majority view that mere knowledge of the Department cannot be curtailed invocation of the extended period of 5 years / ’ provided in proviso to Section 11A(1). However, the aforesaid judgment is no longer a good law, as the same has been specifically x 9&3 3‘ set aside by the Supreme Court in the case of Nizam Sugar Factory Versus Collector of Central Excise, A.P.1. 7. The Commissioner in its show cause notice wrongly stated that the structural items installed by the petitioner herein within its premises do not come within the definition of capital goods. In reply to the said show cause notice, the petitioner has clarified that the benefit of credit on structural iron and steel items was only availed under the head of input and not under the head of capital goods. ln Appeal No.532- 533IRPR-1/2003 dated 19-11-2003 in the case of M/s Singhal Enterprises Private Limited, Raigarh (CG), it has been held that the supporting structure is a necessary part and parcel of machinery of Sponge Iron Plant and the same falls within the definition of capital goods irrespective of their classification. 8. Lastly, it was argued that coordinate Bench of learned CESTAT in appeals preferred by M/s Ambuja Cements Ltd. Vs. C.C.E, Raipur and M/s Aarti Sponge and Power Ltd. Vs. CCE, Chandigarh under Section 35-F of the Act had entirely dispensed with the pre-deposit of the excise duty by the Commissioner, however, the petitioner has been denied of the same relief/without any valid reason. 9. On the other hand, learned counsel for the respondent submitted that the petitioner availed Cenvat Credit on structural iron and steel items used for erection or installation of sponge iron plant. The petitioner was not entitled for Cenvat credit as’the said goods have neither been used in the manufacture of the final .products nor used in the l 1 (2006) 11 Supreme Court Cases 573 P ’"‘ 0/@@ ,5 manufacture of the capital goods. Simi!arly, Oxygen gas and Welding Electrodes can also not be considered as inputs used in the manufacture of their fmal products or inputs used in the manufacture of capital goods. The said goods are used in repairs and maintenance. Thus Cenvat Credit has rightly been disallowed. Since the petitioner faiied to comply with the provisions of Rule 12 of the Central Excise Ruies according to which the assessee is required to submit monthly return to the Superintendent of the Central Excise with regard to production and removal of goods and other relevant particulars and thus, the petitioner has suppressed the material facts from the department with an intent to evade payment of excise duty and, therefore, extended period of limitation under Section 11-A was invocable. Learned CESTAT in exercise of jurisdiction vested in it under Section 35—F of the Act has partly allowed the stay application and waived pre-deposit payment of interest and penalty imposed by the Commissioner and directed to deposit payable excise duty. There is no illegality, innrmity or jurisdictional error committed by the CESTAT in the impugned order warranting interference in exercise of jurisdiction under Article 227 of the Constitution of India. 10. l have heard learned’counsel for the parties. 11. Learned CESTAT, after extensively considering the legal arguments advanced by the respective parties, relying upon the decisions of the Supreme Court in J.K. Cotton Spg. & Wvg Mills Co. Ltd. Vs. Sales Tax Officer, Kanpurz, observed that where any particular process or activity is so integrally related to the ultimate manufacture of goods so 2 1997 (91) ELT 34 (so) y?» gm ,1. that without that process or activity of manufacture may, even if theoretically possible, be commercially inexpedient, goods intended for use in the said process or activity would fall within the expression “in the manufacture of goods”, even though such goods may not be ingredients or commodities used in the processes, nor must they may not be directiy or indirectly needed for ‘turning out or the creation of goods’. 12. After considering the various other judgments of the Supreme Court and different High Courts, it has been observed that it is difficult to accept the contention sought to be canvassed on behalf of the appellant in relation to the claim for availment of Cenvat Credit in relation to the duty paid on the goods in question. 13. Referring the decision in the case of Birla Corporation Ltd., Versus Commissioner of Central Exercise3, wherein it was held that the assessee was entitled to avail the credit in relation to spares and tyres meant for dumpers used within the factory as material handling equipment as also in relation to replacement items. It was further held that spares were for ropeways used for bringing crushed lime stone from the mines to the/factory. It was used for bringing inputs from outside the factory premises into the factory premises and, therefore, it qualified for modvat credit under Rule 57Q of the Central EXcise Rules, 1944. However, it has been observed in the impugned order that the Hon’ble Supreme Court considering that the earlier appeal involving identical issue was dismissed as not pressed and, therefore, the Revenue cannot be permitted to take a different stand in this case. 3 2005 (186) E.L.T. 266 (so) g7 ,. Thus, the appeal was dismissed on the request made by the Attorney General in view of the instructions received by him from the department and no law has been laid down in the matter on the issue in question except on the point that the Revenue cannot take a different stand on same issue in different matters particulariy when the issue stands concluded by the order of the Tribunal and the law laid down in J.K. Cotton Spg. & Wvg Mills Co. Ltd (Supra) holds field. x 14. With regard to the objections about limitation raised by the petitioner, para-14 of the order of the Commissioner has been reproduced and it has been observed that the appellant had not voluntarily declared the emergence of impugned structures of plant and machineries in ER-1 returns and disclosed the same only after notice was issued to him after special audit and thus, there was suppression of material fact with an intent to evade payment of duty and, therefore, the department was entitled to invoke the extended period of limitation. 15. The fact that the petitioner claimed Cenvat Credit against the aforesaid structure was well within the knowledge of the departmental authorities, as account of the petitioner was audited in the past has not been considered. It has, also not been considered that the decision of the Tribunal in Nizam Sugar Factory (Supra) has been set aside by the Supreme Court subsequently in the year 2006 in the case of Nizam Sugar Factory Versus Collector of Central Excise, AP1. 16.Waiver of pre-deposit of entire amount as claimed in the impugned order has been rejected with an observation that no factual matrix has been pleaded and placed on record to justify reduction in the duty Q9? ,1. amount for the purpose of deposit. In the absence of any factual matrix regarding the t1nancial hardship, deposit of entire duty was ordered. 17. in para-21 of the impugned order, the argument of the petitioner for dispensing with payment of entire excise duty on the ground of parity has been rejected with an observation that the observations made by the coordinate Bench as has been discussed in Jayaswals Neco Ltd. case, are binding in nature in relation to final orders passed‘by the Courts/Tribunai. This rule will not apply to the interim orders in strict sense though undoubtediy to maintain judicial discipline it is always expected that coordinate Bench while dealing with the interim matter should not take divergent views on the same issue, as interim orders do not lay down any law as such and they are based on facts of each case. It has been further observed that merely because in one case interim relief has been granted, that does not necessarily follow that every other case wherein some of the facts are of similar nature, in such cases similar order should necessarily follow. However, no distinguishing feature in the case of the petitioner viz a viz the cases in which interim relief has been granted by coordinate Bench to other appellants has not been elaborated. 18. After careful examination of the record, show cause noticei’reply to the show cause notice submitted by the petitioner, the order passed by the Commissioner and the impugned. order and further considering the legal arguments advanced by the respective parties in the light of the various judgments cited by the petitioner and referred to by the CESTAT in the impugned order, i am of the opinion that the petitioner / 3‘ has been able to make a prima facie case on merits as well as on limitation. The petitioner has been called upon to deposit a huge sum of Rs.1 ,25,99,362/— as duty, which may definitely cause hardship to the petitioner. 19. On the basis of aforesaid discussion, i am of the opinion that interest of justice would be served if the order impugned is modified to the extent that in case, the petitioner deposits 50% of Cenvat Credit of Rs.1,25,99,362/— disallowed by the Commissioner within a period of 6 weeks from today, the order of the Commissioner with respect to deposit of balance duty, penalty and interest shall remain stayed. 20. ln the result, the writ petition is partly allowed to the extent indicated above. No orders as to costs. Sd/- Dhirendra Mishra ‘F Judge \Barve {- - ,