2010 (6) TMI 698 - AT - Central Excise

Summary

Issues:
Admissibility of credit on joists used in respect of EOT cranes.

Analysis:
The appeal before the Appellate Tribunal CESTAT NEW DELHI involved a dispute regarding the admissibility of credit on joists used in relation to EOT cranes. The department appealed against the order of the Commissioner (Appeals) dated 16-3-07, specifically focusing on the admissibility of credit on joists amounting to Rs. 43,261, which had been allowed by the Commissioner (Appeals), leading to the setting aside of the penalty. The department argued that materials like joists, angles, beams, bars used for foundation and supporting structures are not eligible for credit, citing a decision by the Larger Bench of the Tribunal in the case of Vandana Global Ltd. The respondent, on the other hand, contended that joists play a functional role in supporting EOT cranes and should be considered independent parts rather than supporting structures. The respondent relied on various legal precedents, including a decision by the Hon'ble Supreme Court and a Tribunal decision, to support their argument.

Upon careful consideration of the submissions from both sides, the Tribunal referred to the decision of the Larger Bench in the case of Vandana Global Ltd. which addressed key questions regarding the eligibility of credit on items like joists. The Tribunal highlighted that goods like cement and steel items used for laying foundation and supporting structures cannot be treated as inputs for capital goods, thus not eligible for credit under the Cenvat Credit Rules. In the present case, the Tribunal found that the joists were indeed used as supporting structures for EOT cranes, aligning with the principles established in the Vandana Global case. Therefore, the credit allowed on joists by the Commissioner (Appeals) was deemed unjustified, leading to the setting aside of the order and restoration of the original authority's decision regarding the disallowance of credit on joists. However, considering the divergent interpretations by different authorities on this issue, the Tribunal concluded that the department's plea for the restoration of penalty was not justified.

In conclusion, the appeal by the department was partly allowed by setting aside the order of the Commissioner (Appeals) that permitted the credit on joists, thereby reinstating the original authority's decision disallowing such credit.