"IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, CHENNAI Excise Appeal No. 40473 of 2023 (Arising out of Order in Appeal No. 203/2023 dated 10.5.2023 passed by the Commissioner of GST & Central Excise (Appeals – II) Chennai) The Ramco Cements Ltd. Appellant Cement Grinding Unit Kattuputhur Village, Olaiyur Post Salavakkam Via Uthiramerur Taluk, Kancheepuram – 603 107. Vs. Commissioner of GST & Central Excise Respondent Chennai Outer Commissionerate Newry Towers, 12th Main Road Anna Nagar, Chennai – 600 040. APPEARANCE: Shri R. Parthasarathy, Consultant for the Appellant Smt. O.M. Reena, Authorized Representative for the Respondent CORAM Hon’ble Shri P. Dinesha, Member (Judicial) Hon’ble Shri M. Ajit Kumar, Member (Technical) FINAL ORDER NO. 41002/2025 Date of Hearing : 12.03.2025 Date of Decision: 10.09.2025 Per M. Ajit Kumar, This appeal is filed against Order in Appeal No. 203/2023 dated 10.5.2023 passed by the Commissioner of GST & Central Excise (Appeals – II) Chennai (impugned order). 2. Brief facts of the case are that the appellant is a manufacturer of cement have availed ineligible CENVAT credit. It appeared that they had short-paid central excise duty. A Show Cause Notice dated 25.5.2010 was issued to them for (i) recovery of duty being ineligible credit availed on cement and structural material for the period September 2008 to August 2009; (ii) short-payment of central excise duty on cement for own use during the period July 2009 to December 2 2009 and (iii) demanding duty on ineligible credit availed on outward transportation service for the period June 2009 to December 2009. After due process of law, the Ld. Original Authority confirmed the demands as regards (i) and (iii) and dropped the demand of duty in respect of (ii). Aggrieved by the said order, the appellant preferred appeal before the Ld. Commissioner (Appeals). Vide the impugned order, the Ld. Commissioner (Appeals) rejected the appeal filed by the appellant. Hence this appeal. 3. Ld. Counsel Shri R. Parthasarathy appeared for the appellant and Smt. O.M. Reena, Ld. Authorized Representative appeared for the respondent. 3.1 The Ld. Counsel for the appellant submitted that the construction of Cement Grinding Plant is essentially a “Turnkey project” and it came into existence only after completion of erection and commissioning of several integral parts of the plant. The individual machinery, equipment, parts and accessories and iron and steel raw materials loose their identity after fabrication and get integrated with the plant. The iron and steel goods were raw materials used in the construction of the Cement Grinding plant. The admissibility of CENVAT credit for the said goods as inputs needs to be decided in accordance with the ‘user test theory’ evolved by the Apex Court in the case of Commissioner of Central Excise, Coimbatore Vs Jawahar Mills Ltd. & Ors [AIR 2001 SUPREME COURT 2500]. Accordingly, the goods which were used primarily for fabrication of structures for capital goods foundation and factory shed should be considered as eligible inputs for CENVAT credit. The Ld. Counsel stated that an identical issue arose in the case of appellant’s own case of setting up their Line-II of the Cement Plant at Ariyalur, Tamil Nadu. The appellants, as in the present 3 case, availed CENVAT credit under “inputs” category for all the goods including machinery parts used in the erection of Line-II of their cement plant. The CENVAT credit taken under the inputs category for iron and steel raw materials was objected to and the case was adjudicated denying input CENVAT credit. On appeal, the CESTAT, Chennai vide its Final Order No: 40400/2019, dated 28.02.2019 after placing reliance on the judgements of the Hon’ble Madras High Court in the case of India Cements Ltd. [2015-321-E.L.T-209-Mad.] and Thiru Arooran Sugars Ltd. [2017-TIOL-1357-HC-MAD-CX] held that the appellants were entitled to avail CENVAT credit under “inputs” category and accordingly, set aside the order of the Commissioner on merits as well as on limitation. Further the dispute regarding admissibility of CENVAT credit for iron and steel raw material and cement was examined by the Larger Bench of the Tribunal in the case of Mangalam Cement Vs. CCE Jaipur - 1 [2018-360-ELT-737 (Tri.LB)]. He stated that the observations of the Larger Bench fits in with the facts in the appellant’s case and is required to be followed in their case. The Ld. Counsel stated that the second issue relating to the admissibility of CENVAT credit for GTA was set to rest in the appellants’ own case by the Larger Bench which relied upon the judgements of Karnataka High Court in the case of Bharat Fritz Warner Ltd. vs CCE Bangalore [2022-66-GSTL-434-KAR], and Madras Cements Ltd. vs Addl. Commr. Bangalore [2015-40-STR-645-KAR]. The appellants submit that the cement bags as well as in bulk are sold on FOR destination basis and the transfer of property in respect of such goods take place only when cement bags are delivered in customers place in good condition and therefore, the place of removal, in their case, is only that of the customer’s place. The appellants submit that the ratio 4 laid down in the Larger Bench was followed by Hon’ble Chennai Bench in the following cases including that of the appellant. a. Inox Air products Ltd. Vs CCE, Chennai -1 [Final Order No: 40201 of 2024 dated 22.2.2024] b. Madras cements Ltd. Vs CCE, Chennai Outer Commissionerate [Final Order No: 40812 of 2024 dated 8.7.2024] He hence, prayed that the impugned order may be set aside. 3.2 Smt. O.M. Reena, Ld. AR appeared for revenue. She stated that in the case of the iron and steel raw materials used in setting up the plant they lose their identity after fabrication and get integrated with the plant. Goods after assembly and erection become fixed to earth which are immovable property and are not excisable and hence goods used in setting up the same are not eligible for input credit. In the case of GTA the factory gate represents the place of removal and outward transportation beyond the place of removal is not input service as per the definition of Rule 2(l) of the Cenvat Credit Rules, 2004. She further reiterated the points made in the findings and prayed that the appeals may be dismissed. 4. We have heard the rival parties and gone through the appeals and written submissions. We find that both the issue i.e. (i) admissibility of CENVAT credit on various iron and steel items used to set up the Cement Grinding Plant and (ii) CENVAT credit on GTA services for outward transportation of cement to their customers/dealers, have been decided in the appellants favour. The relevant case laws are reproduced below: 4.1 A Larger Bench of this Tribunal in MANGLAM CEMENT LTD. Vs COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I [2018 (360) E.L.T. 737 (Tri. - LB)], while examining the issue whether 5 goods which are installed for manufacture of the capital goods should also be considered for availment of CENVAT credit, held as under: 8. Applying the user test of ‘capital goods’ as enunciated by the Hon’ble Supreme Court in the case of Rajasthan Spinning & Weaving Mills (supra), the Hon’ble Madras High Court in the case of India Cements Ltd., reported in 2012 (285) E.L.T. 341 (Mad.), 2014 (305) E.L.T. 558 (Mad.), 2014 (310) E.L.T. 636 (Mad.) and 2015 (321) E.L.T. 209 (Mad.) has extended the Modvat benefit on Cement and steel items, considering the same as ‘capital goods’ under Rule 57Q of the erstwhile Central Excise Rules, 1944. Since, said rule is pari materia with the present Rule 2(a) of the CCR, 2004, the disputed goods, in the present case, should be considered as ‘capital goods’ for the purpose of the CENVAT benefit. 9. On perusal of definition of ‘input’ extracted above, it would reveal that all the goods (excepting light diesel oil/high speed diesel oil and motor spirit) are considered to fall under such definition, when ‘used in or in relation to manufacture of final products’, whether directly or indirectly, and whether contained in the final product or not. The only condition required to be fulfilled is that the goods must be used within the factory of production. Further, Explanation 2 appended to such definition clause provides that ‘input’ includes goods, which are used in the manufacture of capital goods for further use in the factory of the manufacturer. On a conjoined reading of the definition of input and Explanation 2 appended thereto, it makes the position clear that inputs are not only goods, which are used in the manufacture of final products, but also those which are ‘used in or in relation to’ the manufacture of the final product. The relationship between those goods and the final product could be either direct or indirect and may include or may not include their presence in the final products. Goods used in the manufacture of capital goods, which are installed for manufacture of the capital goods should also be considered for availment of CENVAT credit. In the case in hand, the cement and steel bars used to erect foundations for installing different machines in the power plant should also merit consideration as ‘input’ for the purpose of CENVAT benefit. Analyzing and interpreting scope of the definitions of ‘input’ and ‘capital goods’, the Hon’ble Madras High Court in the case of M/s. Thiru Arooran Sugars & Ors. (Civil Misc. Appeal Nos. 3814/2011 and 2695 and 2696/2012) has held that steel and cement used for laying of foundation for erection of capital goods should be eligible for the CENVAT benefit under the present set of rules. The relevant paragraph in the said order is extracted herein below:- “44. In the facts of this case, we have to conclude that MS structural, which support the plant and machinery, which are, in turn, used in the manufacture of sugar and molasses are an integral part of such plant and machinery. The assessee has clearly demonstrated that structural as well as foundations, which are erected by using steel and cement are integral part of the capital goods (i.e., plant and machinery), as they hold in position the plant and machinery, which manufactures the final product. Therefore, in our opinion, whether the “user test” 6 is applied, or the test that they are the integral part of the capital goods is applied, the assessees, in these cases, should get the benefit of CENVAT credit, as they fall within the scope and ambit of both Rules 2(a)(A) and 2(k) of the 2004 Rules.” 10. In view of above analysis, we are of the considered opinion that the eligibility to duty credit of the disputed goods cannot be denied. Such eligibility either as ‘capital goods’ (accessories) or as ‘inputs’ has been examined and upheld by various decisions of the Hon’ble Apex Court and the Hon’ble High Courts as above. Accordingly, we answer the reference in favour of the appellant. The appeal file is returned to the referral Bench for a decision on merit. 4.2 The issue whether credit of various goods that are basically in the nature of capital goods was eligible or not as the goods after assembly and erection become fixed to earth which are immovable property and are not excisable came to be examined in Final Order No: 40400/2019, dated 28.02.2019, in the appellants’ own case. Relevant portion of the Order is reproduced below:- 6.2 Although it is alleged in the Show Cause Notice that the goods did not fall within the definition of ‘inputs’, the reason for which the Credit has been disallowed is that after assembly and installation of such items, they become immovable property and therefore, are not eligible for Credit. From the Show Cause Notice as well as the impugned Order, it is seen that various items were used for setting up of the cement plant. Many of these items are components or small parts which go into assembly, installation or commissioning of machines and equipment. As per Explanation-2 of the definition of inputs, as it stood during the relevant period, ‘input’ includes the goods used in the manufacture of capital goods which are further used in the factory of the manufacturer. Thus, all those items which are brought into the factory and used for the manufacture of capital goods, which are further used for the manufacturing activity, would be eligible for Credit. 6.3 The Department does not have a case that the items are not used as part of the cement plant. Instead, the Credit has been disallowed observing that these items take the nature of immovable property after being fixed to earth. The Department has placed reliance on the Larger Bench decision in the case of M/s. Vandana Global Ltd. (supra) to reach such conclusion, wherein it was held that after assembly/installation/erection, the machinery and components would result in the emergence of immovable property, which is non-excisable goods. This view was considered to be no longer good law in the decision of Mundra Ports & Special Economic Zone Ltd. (supra) as well as the decision of the Hon’ble High Court of Chhattisgarh in the case of M/s. Vandana Global Ltd. Vs. Commissioner of C.Ex. & 7 Cus., Raipur – 2018 (16) G.S.T.L. 462 (Chhattisgarh). The Hon’ble jurisdictional High Court in the case of India Cements (supra) and Thiru Arooran Sugars (supra) has analysed the eligibility of Credit on the basis of user test laid down by the Hon’ble Supreme Court in the case of Commr. of C.Ex., Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd. – 2010 (255) E.L.T. 481 (S.C.). These cases assist the arguments of the appellant. 6.4 Thus, following the decisions stated above as well as appreciating the facts presented by the records, we are of the considered opinion that the disallowance of Credit on the impugned items under the category of ‘inputs’ is unjustified and requires to be set aside, which we hereby do.\" A similar decision was also taken in the appellants own case again vide Final Order 40596/2025 dated 09.06.2025, relying on the above order. 4.3 The issue of availing CENVAT credit on GTA services was examined in Bharat Fritz Warner Ltd. (supra). The Hon’ble High Court of Karnataka held: “6. Appellant is a Private Limited Company engaged in manufacture of Special Boring Bars and Tools Holding Systems. As per the purchase orders, it has delivered the final product at buyer’s place. 7. It availed Cenvat credit of service tax paid on Outward Goods Transport Agency (GTA) service used for transporting final product to customer’s place. A show cause notice was issued calling upon the appellant as to why the credit availed should not be demanded under Section 11A of the Central Excise Act read with Rule 14 of Cenvat Credit Rules; and interest and penalty should not be imposed. Appellant contested the show cause notice and the adjudicating authority passed the Orderin-Original C. No. V/84/15/82/2015/ Adjn.BII, dated 29-2-2016 confirming the demand of Rs. 20,48,961/-, interest of Rs. 20,48,961/- and penalty of Rs. 1,50,000/-…. xxxxx xxxx xxxxx xxxxx 13. The CESTAT, in the case of Bharat Fritz Werner Ltd. v. C.C., C.E. & S.T-Commissioner of Central Tax [CEA 56/2019], has recorded in paragraph No. 5 that as per the purchase orders, appellant was required to supply the goods at the buyer’s premises and the price of goods would include ‘outward freight’. Similarly, in the case of MAPAL India Pvt. Ltd. [CEA 71/2019], the CESTAT has recorded a similar finding. 14. It is clear that as per Section 4(3)(c)(iii) of Central Excise Act, 1944, the definition of ‘Place of Removal’ means the premises from where the excisable goods are to be sold after their clearance form the Factory. 8 15. The ‘Input Service’ defined in Rule 2(1) of Cenvat Credit Rules, 2004, includes any service in relation to ‘Outward Transportation’ up to the ‘Place of Removal’. 16. This Court in the case of Madras Cements Ltd., has held as follows : “11. From the facts of the present case, it is clear from the invoices that title of the goods had passed on from seller to buyer only at the place of destination, which is the address of the buyer. As such, the buyer had no right over the goods till delivered to it. The Tribunal has not considered this aspect and has only relied on the amendment made to the definition of “input service” with effect from 1-42008 and rejected the claim of the appellant-assessee after that date. No further reason has been given by the Tribunal nor any finding has been recorded with regard to place of completion of sale of the goods. 12. Since we are of the opinion that the sale had concluded only after the delivery of the goods was made at the address of the buyer, in the facts of the present case the appellant- assessee would be entitled to the benefit of Cenvat credit on Service Tax paid on outward transportation of goods by the assessee even after 1-4-2008. The appellant-assessee would thus be entitled to such benefit for the period 1-4-2008 to 31-7-2008 which has been denied to it by the authorities below. 13. For the forgoing reasons, this appeal stands allowed. The question of law is answered in favour of the assessee and against the Revenue. The order of the Tribunal to the extent of disallowing Cenvat credit to the appellant for the period after 31-3-2008 is quashed.” 17. The Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs, New Delhi, has issued Circular dated 8-6-2018 and clarified the definition, ‘Place of Removal’. In Para 5 of the Circular, the Ministry has referred to the judgment in the case of CCE & ST v. Ultra Tech Cement Ltd. [Civil Appeal No. 11261 of 2016, dated 1-2-2018] [2018 (9) G.S.T.L. 337 (S.C.)] and stated that, in that case, the Apex Court has held that Cenvat credit on GTA Service from the place of removal to the buyer’s premises is not admissible. 18. In the instant cases, the place of removal is buyer’s premises. Therefore, the authority in the case of Madras Cements Ltd., is applicable to the facts of this case and these appeals merit consideration. …” (emphasis added) In the above judgment the Karnataka High Court found the buyer’s premises to be the place of removal and allowed Cenvat credit on service tax paid for GTA services as eligible input credit. 9 4.4 The above judgment was relied upon by the Larger Bench of this Tribunal in its Order in the appellant case [See: M/s. The Ramco Cements Limited Versus Commissioner of Central Excise, Puducherry - 2023 (12) TMI 1332 - CESTAT CHENNAI-LB]. It was held as under: “32. The interpretation of the judgment of the Supreme Court by the High Courts as above throws light on the controversy. The Rajasthan High Court in Mangalam Cements simply referred to the judgment of the Supreme Court without analyzing its applicability in the context of the case in denying the credit on GTA service. The Supreme Court set aside the said judgment and remanded the case to examine the facts in the light of the judgment. On the other hand, in the judgment of the Karnataka High Court in Bharat Fritz Werner, all aspects of the case have been considered, including the Circular dated 08.06.2018 of the Board, and the judgments of Supreme Court in Emco Ltd. and Roofit Industries to conclude that the place of removal is the buyer’s premises. 33. No evidence has been placed by either side that the said judgment of the Karnataka High Court has been challenged before the Supreme Court by the department. 34. In such circumstances, following the ratio laid down by the Larger Bench of the Tribunal in Collector of Central Excise, Chandigarh vs. Kashmir Conductors [1997 (96) E.L.T. 257 (Tri.)], it is the judgment of Karnataka High Court which would be binding on the Tribunal. (emphasis added) 5. In the light of the discussions we find that the appeal succeeds on both the issues discussed above and the appellant is eligible for the credit of service tax paid. We hence set aside the impugned order and allow the appeal with consequential relief, if any, as per law. (Order pronounced in open court on 10.09.2025) (M. AJIT KUMAR) (P. DINESHA) Member (Technical) Member (Judicial) Rex "