2011 (1) TMI 213 - AT - Central Excise

Cenvat credit - lower authorities were of the view that the credit availed is irregular and did not fall within the scope of either capital goods or components - findings of the lower authorities that these goods were used by the respondent for manufacture / fabrication of blending vessel and heating coil pipeline - these blending vessels, heating coil pipeline were essential for manufacture of their finished goods i.e. lubricating oils - inputs were used for manufacture/fabrication of blending vessel and heating coil pipeline which are further used in the manufacture of lubricating oils, there is no effective challenge from the revenue side nor there is any contrary evidence - assessee had used identical products for fabrication of sugar manufacturing equipment was involved Appeal rejected

Summary

Issues:
- Whether the appellant was correct in availing Cenvat credit on specific goods under Chapter 72 of the Central Excise Tariff Act, 1985.
- Whether the goods in question were used for the manufacture of essential machinery.
- Whether the findings of the lower authorities were correctly upheld by the Commissioner (Appeals).

Analysis:

Issue 1: Availing Cenvat Credit
The appellant availed Cenvat credit on HR Coils/plates, MS Plates, MS Angles, MS Channels, etc., falling under Chapter 72 of the Central Excise Tariff Act, 1985. The lower authorities initially viewed this credit as irregular. However, after due process, it was found that these goods were used in the manufacture of machinery essential for production activities. The Commissioner (Appeals) also confirmed that there was no dispute regarding the usage of these inputs for the manufacture of blending vessel and heating coil pipeline, crucial for producing lubricant oil. The appellant relied on the decision in Vishwanath Sugars Ltd. case, where similar goods were used for fabricating sugar manufacturing equipment. The appellate tribunal found no effective challenge from the revenue side against these facts and upheld the decision, citing the lack of contrary evidence.

Issue 2: Usage in Essential Machinery
The crux of the matter was whether the goods in question were utilized in the manufacture of essential machinery. It was established that the HR Coils/plates, MS Angles, MS Channels, etc., were indeed used in the fabrication of blending vessel and heating coil pipeline, which were integral to the production of lubricating oils. The Commissioner (Appeals) relied on factual findings and upheld that these inputs were crucial for the manufacturing process. The decision was supported by the precedent set in the Vishwanath Sugars Ltd. case, where a similar situation was deemed acceptable.

Issue 3: Upholding of Lower Authorities' Findings
The Commissioner (Appeals) rejected the appeal filed by the Revenue, upholding the Order-in-Original based on factual findings and legal precedents. The Revenue contested this decision, arguing that the goods in question did not qualify as capital goods. However, the tribunal found no reason to interfere with the lower authorities' decision, as the usage of the inputs in essential machinery for manufacturing lubricating oils was well-established and supported by legal precedents.

In conclusion, the appellate tribunal dismissed the Revenue's appeal, affirming the lower authorities' findings that the appellant was justified in availing Cenvat credit on the specified goods, as they were used in the production of essential machinery for manufacturing lubricating oils. The judgment highlighted the importance of factual findings and legal precedents in determining the eligibility of Cenvat credit on specific inputs under the Central Excise Tariff Act, 1985.