Whether there is any distinction between storage tanks for storing liquid or solid goods for the purpose of allowing credit?

PJ/CASE LAW/2015-16/2564

Case:- GRASIM INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II

Citation:-2015(315) E.L.T. 426 (TRI.-DEL.)

Brief Facts:-The short issue involved in the present appeal is as to whether the appellant is entitled to avail Cenvat credit of duty paid on Cement and Steel Pars, which stand used for the construction of Silo, used for the storage of cement bags. The credit availed by them in the month of March 2009 stand denied to them on the ground that the construction of storage of Silos cannot be held to be an activity connected with their business so as to allow the Cenvat credit of duty paid on the same.

Appellant Contentions:-Appellant submitted that the issue is no more res integra and stand settled by the following decisions:-

(1) Bannari Amman Sugars Ltd. v. CCE, Mysore reported in 2010 (250)E.L.T. 326 (Kar.);
(2) CCE, Bangalore-II v. SLR Steels Ltd. reported in 2012 (280)E.L.T. 176 (Kar.);
(3) CCE, Mysore v. ICL Sugars Ltd. reported in 2011 (271)E.L.T. 360 (Kar.);
(4) CCE, Belgaum v. Doodhaganga Krishna Sahakari Sakkare Karkhane Niyamit reported in 2013 (297)E.L.T. 361 (Kar.);
(5) Sai Samhita Storages P. Ltd. v. CC & CE, Visakhapatnam-II reported in 2010 (255)E.L.T. 91 (Tri. - Bang.);
(6) CCE, Visakhapatnam-II v. Sai Sahmita Storages (P) Ltd. reported in 2011 (270)E.L.T. 33 (A.P.) = 2011 (23)S.T.R. 341 (A.P.); and
(7) CCE, Jalandhar v. Pioneer Agro Extracts Ltd. reported in 2008 (230)E.L.T. 597 (P & H).

It stands held in all the decisions that the cements and various steel items used for construction of storage tanks are admissible cenvatable inputs.

Respondent Contentions:-Learned DR appearing for the Revenue has tried to make a distinction in the said decision by submitting that the storage tanks in all the decisions are meant for storing of liquids waste, whereas the silos in the present case is meant for storing of cement bags. As such, the ratio of the above decisions would not apply.

Reasoning of Judgment:-CESTAT find no merits in the above distinction sought to be made by the learned DR. Storage facilities whether for storing of liquid or storing of solid goods remains storing facilities only and once such storage is essential and is required for smooth running of the factory, the construction of the same has to be held in connection with business activity and the materials used in the construction of the same cannot be denied the Cenvat credit. As such, by following the above decisions, no merits were found in the impugned orders of authorities below. Accordingly, the same are set aside and appeal is allowed with consequential relief.

Decision:-Appeal allowed.

Comment:- The crux of this case is that storage facilities whether for storing of liquid or storing of solid goods remains storing facilities only and once such storage is essential and is required for smooth running of the factory, the construction of the same has to be held in connection with business activity and the materials used in the construction of the same cannot be denied the Cenvat credit.

Prepared by: Hushen Ganodwala

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PJ/CASE LAW/2015-16/2564

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