2016 (4) TMI 1203 - AT - Central Excise

CENVAT credit - input - cement - denial on the ground that cement cannot be considered as input for the manufacture of final products - Held that - On perusal of the definition of inputs contained in both the erstwhile Central Excise Rules 1944 and the CCR 2002 it reveals that though the definition is broad enough to take within its ambit various materials for consideration as inputs but in absence of use of particular goods either directly or indirectly in the manufacture of the final product the Cenvat benefit is not available to the assessee. The nature of use of cement in this case shows that the same is neither used directly or indirectly in the manufacture of the final product and thus the Cenvat credit is not available to the appellant - since the issue relates to interpretation of the provisions of cenvat statute Section 11AC of the CEA 1944 cannot be invoked - appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
Disallowance of Cenvat Credit on cement in the adjudication order.

Analysis:
The appellant, engaged in the manufacture of Zinc Lead, used cement for filling cavities in mines. The Central Excise Department disallowed Cenvat credit on cement, stating it is not an 'input' for manufacturing final products. The appellant argued that cement is essential for continuous procurement of ore, citing relevant rules and judgments supporting their claim. The respondent contended that cement was not used in or related to the final product's manufacture, referencing judgments that cement is not eligible for credit as a construction material. The Tribunal examined the definitions of 'inputs' in the Central Excise Rules and Cenvat Credit Rules, concluding that since cement was not used directly or indirectly in manufacturing the final product, Cenvat credit was not applicable. The Tribunal distinguished the appellant's case from precedents cited by both parties, upholding the disallowance of Cenvat credit on cement. Notably, the Tribunal ruled out the imposition of penalty under Section 11AC of the Central Excise Act, as it applies only in cases involving fraud or wilful misstatement to evade duty payment, which was not present here. The impugned order disallowing Cenvat credit on cement was upheld based on the interpretation of the provisions of the Cenvat statute.

This detailed analysis of the judgment highlights the arguments presented by both parties, the Tribunal's examination of relevant rules and precedents, and the final decision regarding the disallowance of Cenvat credit on cement. The Tribunal's reasoning, distinguishing the appellant's case from cited judgments, and the clarification on the applicability of penalty under Section 11AC provide a comprehensive overview of the legal issues addressed in the judgment.