2016 (1) TMI 1167 - AT - Central Excise

CENVAT credit - recovery of credit availed on MS plates, Channels, Joists, Beams, Angles, HR Coils, etc. as capital goods, alongwith interest and penalty - lack of sufficient documentary evidence that the impugned items were used in fabrication of capital goods/accessories/ parts/components - Held that - A Chartered Engineer s Certificate though produced before both the authorities has not been considered at all. The said expert has given details regarding the manner and use of the impugned items. Further, the fact of purchase of these items and their receipt in factory is not disputed. Revenue does not have a case that such purchased items were diverted by the appellant in any manner. On such score, I am able to safely infer basing on the certificate issued by the Chartered Engineer and photographs that the impugned items were used for fabrication of capital goods/components/parts/accessories - reliance placed on the decision of the case of Rajasthan Spinning and Weaving Mills Ltd. 2010 (7) TMI 12 - SUPREME COURT OF INDIA where on similar issue it was held that credit is admissible. Appeal allowed - credit allowed - decided in favor of appellant.

Summary

Issues: Denial of credit on MS items

Issue 1: Denial of credit on MS items
The appellants, engaged in manufacturing Steel Ingots/Billets, were denied credit on MS plates, Channels, Joists, Beams, Angles, HR Coils as capital goods. A show cause notice was issued for wrong availment of credit. The Original authority confirmed the demand, interest, and penalty. The appellants appealed, arguing that the MS items were used for fabrication of capital goods like ladle, con-cast unit, oil tank, Pollution Control equipment, chimney, and Gantry or EOT crane. They provided a certificate by a Chartered Engineer and relied on legal precedents to support their case. The AR contended that the appellants failed to produce sufficient documents to establish the use of MS items in fabrication of capital goods and that the demand was justified due to lack of proper records.

Issue 2: Evaluation of evidence
The Tribunal considered the submissions and evidence presented. The Chartered Engineer's Certificate detailing the use of the impugned items was crucial. The tribunal noted that the purchased items were received in the factory, and there was no dispute regarding their purchase or diversion. Relying on the certificate and photographs, the tribunal inferred that the MS items were indeed used for fabrication of capital goods/components/parts/accessories. The tribunal emphasized that the denial of credit based on insufficient documentary evidence was unjustified.

Issue 3: Legal precedent and eligibility for credit
The tribunal referenced legal judgments that established the eligibility of MS items used for fabrication of capital goods for credit. Citing precedents, the tribunal concluded that the denial of credit in this case was unwarranted. The tribunal set aside the impugned order, allowing the appeal with consequential reliefs. The decision highlighted the importance of proper documentation and expert certification in establishing the eligibility of input credit on MS items used in manufacturing processes.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, evaluation of evidence, reliance on legal precedents, and the final decision rendered by the Tribunal in favor of the appellants.