2010 (10) TMI 329 - AT - Central Excise

Cenvat credit - Whether impugned items, namely, Lattice Steel Structure, Lattice Type Transmission Towers, Hot Dip Lattice Tower, Lattice Type Tower are entitled for availing cenvat credit or not - The impugned goods are nothing but accessories of electrical items as defined by the Apex Court in the case of Mehra Bros v. Joint Commercial Officer wherein it was held that accessory means an object or device that it is not essential in itself but that which adds to the beauty or convenience or effectiveness of something else or is supplementary or secondary or something of greater or primary importance which assists in operating or controlling or may serve as aid to a accessory - Hence, these items are qualified as accessories of capital goods and the same are entitled for input credit. Held that the finding of the lower appellate authority that the impugned goods are accessories to a group of machineries is correct - Hence,do not find any reason to interfere with the impugned order - The appeal field by the Revenue is rejected.

Summary

Issues:
- Appeal against allowing cenvat credit on specific goods under capital goods credit account.
- Determination of whether the disputed items qualify as accessories to machineries for availing cenvat credit.

Analysis:
1. The appeal was filed challenging the lower appellate authority's decision to allow cenvat credit on specific items under the capital goods credit account. The dispute arose when the Revenue contended that the items in question did not fall under the definition of 'capital goods' as per Rule 2(a) of Cenvat Credit Rules, 2004.

2. The respondent availed cenvat credit on various items falling under Chapter sub-heading No. 7308.20 of the Central Excise Tariff, alleging that these items were accessories to the group of machines and machineries in the steel melting shop. The adjudicating authority confirmed the demand, but the lower appellate authority allowed the cenvat credit, emphasizing the usage of the items as accessories without contradictory evidence from the Revenue.

3. The Revenue argued that the disputed items were immovable property and supporting structures of machineries, thus not qualifying as accessories. Citing legal precedents, the Revenue contended that certain items, once affixed or fabricated into a structure, become immovable and are not eligible for excise duty, as established in various court decisions and tribunal rulings.

4. Conversely, the respondent's advocate asserted that the impugned goods were indeed accessories to their machineries, supported by photographs demonstrating their accessory nature. Referring to legal cases, including a Supreme Court ruling, the advocate argued that items used with main articles could be considered accessories, thus justifying the lower appellate authority's decision.

5. The central issue revolved around whether the disputed items, such as Lattice Steel Structure and Transmission Towers, qualified as accessories eligible for cenvat credit. The lower appellate authority had deemed these items as accessories to the main plant, making them eligible for credit.

6. The analysis considered the definition of 'components, spares, and accessories' under Cenvat Credit Rules, 2004, to determine the eligibility for credit. The lower appellate authority's decision to allow credit was based on the classification of the impugned items as accessories, which was further supported by the user test applied by the respondents.

7. The examination revealed that the disputed goods were essential for the transmission of electricity to machines crucial for the manufacturing process, complying with relevant electricity rules. Referring to legal interpretations of 'accessory,' the judgment concluded that the items qualified as accessories of capital goods, making them eligible for input credit.

8. Consequently, the judgment upheld the lower appellate authority's decision, rejecting the Revenue's appeal and confirming the eligibility of the disputed items as accessories for cenvat credit. The cross objections were also disposed of accordingly.

This detailed analysis provides a comprehensive overview of the legal judgment, highlighting the key issues, arguments presented by both parties, relevant legal precedents, and the ultimate decision reached by the tribunal.