2013 (9) TMI 1089 - AT - Central Excise

CENVAT credit - MS Angles Channels Bars Plates Joists etc. - steel items used for making Gantry for EOT Crane and also for installation of conveyor for handling of material - whether the steel items in question are eligible for Cenvat credit? - Held that - the Tribunal in the case of Mastech Technologies Pvt. Ltd. v. CCE Jaipur-I 2013 (5) TMI 241 - CESTAT NEW DELHI has held that the steel items used for fabrication of Gantry rails on which the EOT cranes moves would be eligible for Cenvat credit - Since without Gantry the EOT crane cannot function the same has to be treated as part of the EOT crane and hence the steel items used for production of goods for manufacture of final products would be eligible for Cenvat credit - the steel items used for fabrication of conveyor system for handling of material would also be eligible for Cenvat credit as input - appeal allowed - decided in favor of assessee.

Summary

Issues:
1. Eligibility of steel items for Cenvat credit.

Analysis:
The case involved the appellant, manufacturers of HDPE drums chargeable to Central Excise duty, who took Cenvat credit for steel items used in the fabrication of Gantry for EOT Crane and installation of a conveyor for material handling. The department disputed the eligibility of these steel items for Cenvat credit, leading to a show cause notice and subsequent confirmation of the demand by the Deputy Commissioner, along with penalties. The Commissioner (Appeals) upheld this decision, prompting the appellant to file an appeal.

During the proceedings, the appellant's counsel argued that the steel items were used for specific purposes and should not be denied Cenvat credit based on Explanation - 2 to Rule 2(k) of the Cenvat Credit Rules, 2004. The counsel highlighted that the steel items were not used for construction activities excluded under the said provision and cited relevant judgments to support their case.

On the other hand, the Departmental Representative supported the impugned order, reiterating the findings of the Commissioner (Appeals). After hearing both sides and examining the records, the Member (T) considered the crucial point of dispute - the eligibility of the steel items for Cenvat credit. The Member referred to previous judgments, including those of the Tribunal and High Court, which supported the eligibility of similar steel items used in the production process.

Ultimately, the Member concluded that the steel items used in fabricating the Gantry for EOT Crane and conveyor system for material handling were integral to the production process and hence eligible for Cenvat credit as inputs. Drawing from precedents, the Member set aside the impugned order, allowing the appeal in favor of the appellant. The judgment emphasized the importance of considering the functional necessity and role of such steel items in the manufacturing process to determine their eligibility for Cenvat credit.