2013 (8) TMI 874 - AT - Central Excise

Denial of CENVAT Credit - whether the appellant are eligible for Cenvat credit of Central Excise duty paid on the steel balls & cylpebs used in grinding mill for grinding clinkers into cement and rods & hammer used in Hammer Mills - Held that - As regards the grinding media balls and cylpebs, there is no dispute that the same are used as grinding media in grinding mill for grinding cement clincker into cement. In terms of the Board s Circular dated 1-4-2010, the grinding media balls are to be considered as components of the capital goods for the purpose of Cenvat credit. In view of this, I hold that the grinding media balls and cylpebs, etc. used as grinding media in the grinding mills are capital goods and would be eligible for Cenvat credit. As regards the rods and hammers, since undisputedly, the same are used in the hammer mills, where the limestones are crushed, the same have to be considered as part of the hammer mill and would be covered by the definition of capital goods and hence, would be eligible for Cenvat credit. - Decided in favour of assessee.

Summary

Issues:
- Eligibility of Cenvat credit for Central Excise duty paid on steel balls, cylpebs, rods, and hammers used in manufacturing cement.

Analysis:
The appellant, a cement manufacturer, sought Cenvat credit for Central Excise duty paid on steel balls, cylpebs, rods, and hammers used in the manufacturing process. The dispute centered around whether these items qualified for Cenvat credit. The department contended that these items were not eligible for credit, leading to a demand for recovery along with interest and penalty. The Deputy Commissioner issued an order confirming the demand, which was upheld by the Commissioner (Appeals), prompting the appellant to file an appeal.

During the hearing, the appellant's counsel referenced a Board circular clarifying that grinding media such as alumina balls and ceramic pebbles should be considered components of capital goods for Cenvat credit purposes. The counsel argued that these items, along with rods and hammers used in the manufacturing process, should be eligible for Cenvat credit. On the other hand, the Departmental Representative supported the impugned order.

Upon review, the Member (T) considered the submissions and records. Regarding the grinding media balls and cylpebs, it was acknowledged that they were essential components in the manufacturing process and thus qualified as capital goods for Cenvat credit purposes based on the Board's circular. Consequently, the Member held that these items were eligible for Cenvat credit. Similarly, the rods and hammers, being integral parts of the hammer mills used in the production process, were deemed to fall under the definition of capital goods, making them eligible for Cenvat credit as well.

In conclusion, the Member found the impugned order unsustainable and set it aside, allowing the appeal in favor of the appellant.