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2013 (1) TMI 731 - AT - Central ExciseDenial of CENVAT Credit - Whether the MS angle and HR sheet used for fabrication of storage tank are entitled for Cenvat credit or not - Held that - As per explanation to Rule 2(k) of the Cenvat Credit Rules, 2004, storage tanks have been specified as capital goods and, therefore, inputs which are used in the manufacture of capital goods are also eligible for Cenvat credit. It is not in dispute that the steel items such as MS angles, HR sheets have not been used in the construction of storage tank which is a capital goods therefore, Cenvat credit on these MS angle and HR sheet cannot be denied. - Decided in favour of assessee.
Issues:
Cenvat credit denial on MS angle and HR sheet under Central Excise Tariff Act, 1985. Analysis: The appellant appealed against the denial of Cenvat credit on MS angle and HR sheet used for fabrication of a storage tank. The appellant contended that they are entitled to the credit under Explanation 2 to the definition of "inputs" in Rule 2(k) of Cenvat Credit Rules, 2004. The appeal sought to set aside the impugned order and allow the credit. On the contrary, the Revenue opposed the appellant's contention, arguing that the items were used for a structure embedded in the earth, citing a Tribunal's Larger Bench decision. The Revenue contended that as per the decision, the Cenvat credit in question would not be admissible to the appellant. The Tribunal considered both sides' arguments and the submissions made. The dispute centered on whether the MS angle and HR sheet used for the storage tank fabrication were eligible for Cenvat credit. The definition of "Capital goods" under Rule 2(a) of the Cenvat Credit Rules, 2004 was crucial in this case. The explanation to Rule 2(k) specified storage tanks as capital goods, making inputs used in their manufacture eligible for Cenvat credit. Since the steel items were not used in the construction of the storage tank, which qualifies as a capital good, denying Cenvat credit on the MS angle and HR sheet was deemed incorrect. In light of the above analysis, the impugned order was set aside, and the appeal was allowed with any consequential relief.
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