Rachna Gupta ORDER
Rachna Gupta, Member (J)
1. The present appeals are challenging the Order-in-Original No. 7/2015 dated 30.03.2015 for the period 2008 to April, 2013 and Order-in-Original No. 28/2015 dated 28.12.2015 covering the period 2008-09 to 2013-14. Both the appeals are being decided through this common order.
2. The appellant is a refinery for the manufacture of petroleum products. During the period in dispute, Crude Oil Refinery project in District Sagar, M.P. was being set up and as part of setting up, the appellant awarded a lumpsum contract to M/s. Driplex Water Engineering Limited (Contractor), the contractor for setting up RO-DM Water Plant at the premises of the appellant. The dispute also involved the works contract awarded to M/s. Bridge & Roof Co. Limited for supply of fired heat for M.H. block (contractor). The contractor discharged service tax under the category of "Works Contract Service" as defined under Section 65(105)(zzzza) of the Finance Act, 1994. The contractor paid the service tax under the Works Contract Composition Scheme and the appellant availed cenvat credit of the service tax so paid. In terms of the Works Contract Composition Scheme, the contractor was not allowed to avail cenvat credit on inputs used by him in providing the service. The Department during the course of verification of the accounts of the appellant, noticed that the appellant had availed cenvat credit on certain inputs as well as various capital goods. In respect of these inputs and capital goods, the buyer was shown as the contractor but the consignee was shown as Bharat Oman Refineries Limited (BORL) (appellant). The Department was of the view that such cenvat credit on inputs and capital goods was not admissible to the appellant inasmuch as such credits would not have been admissible to the contractor, who has opted to pay the service tax in terms of the Works Contract Composition Scheme. Consequently, show cause notices were issued and vide the impugned order the cenvat credit on inputs and capital goods were denied and the adjudicating authority also imposed penalties. Aggrieved by the decisions, the present appeals have been filed by the appellant.
3. With the above background we heard Sh. B.L. Narasimhan & Sh. Akhil Gupta, ld. Advocates for the appellant as well as Sh. M.R. Sharma, ld. AR representing the Revenue.
4. On behalf of the appellant the main submissions are summarised below:-
(i) In respect of capital goods, it was submitted that the cenvat credit will be allowable in terms of Rule 2(a) of the Cenvat Credit Rules, 2004, in respect of all goods used in the factory of the manufacturer of the final products. All the capital goods for which credit has been availed are undoubtedly used by the appellant in his factory and hence the credit cannot be denied. He relied on the decision of the Tribunal in the case of Commissioner of Central Excise, Jalandhar vs. International Tractor Ltd. -2007 (220) ELT 155 (Tri. Del.) which was also affirmed by the Hon'ble High Court of Punjab & Haryana reported as 2010 (255) ELT 196 (P & H). Ld. Advocate emphasised that the ownership of the capital goods is immaterial in availing the cenvat credit on capital goods. In this connection, he relied on the decision of the Tribunal in the case of Commissioner of Central Excise, Raigad vs. JSW Ispat Steel Ltd. -2015 (327) ELT 549 (Tri. Mum.).
ii) He also submitted that credit on capital goods for the appellant cannot be denied by considering the same as inputs for the contractors. In this connection, he referred to the definition of input in Rule 2(a) of the Cenvat Credit Rules, 2004 which specifically excludes capital goods from the purview of inputs.
iii) He however submitted that i........