2011 (5) TMI 475 - AT - Central Excise

Cenvat Credit - manufacturer of sugar - aluminum bars used as carrier of electricity generated by the power turbine alternator -Since aluminum bars are being used as conductors and are essential part the same in my view has to be treated as parts of the machinery and hence the same have to be treated as capital goods. In respect of aluminum bars the credit has been correctly allowed. CRSS coils shapes & section channel angles plates and SS plate etc. which according to respondent had been used for fabrication of boiling house pipeline pan body mill house EOT crane etc - the use of these items is not clear - The Cenvat Credit in respect of these items would be admissible only if it is proved by the manufacturer that the same have been used as input in the manufacture of capital goods and in that case these items would have to be treated as input under the Rule 2(k) of Cenvat Credit Rules 2004. Since the use of these items has not been discussed in the impugned order the matter has to be remanded for a de-novo discussion.

Summary

Issues:
Dispute over eligibility for Cenvat Credit on aluminum bars and CRSS coils, shapes & section, channel, angles, plates, and SS plate used in manufacturing processes.

Analysis:
The Assistant Commissioner disallowed Cenvat Credit on the items, stating they are neither inputs nor capital goods. The Commissioner (Appeals) overturned this decision, allowing the credit. The Revenue appealed this decision. The respondent did not appear for the hearing, resulting in an ex-parte decision.

The Revenue argued that the items were used for fabrication of structures fixed to the earth and cited a Tribunal judgment to support their claim. They contended that the items were not eligible for Cenvat credit. The aluminum bars were also challenged as not being covered under the definition of capital goods.

The Tribunal considered the submissions and records. Aluminum bars were deemed essential for transmitting electricity and thus treated as parts of machinery eligible for Cenvat Credit. However, for CRSS coils and other items, their admissibility for credit depended on their use. If used for foundation or supporting structures, credit would not be allowed unless proven to be used as inputs in manufacturing capital goods. Due to lack of clarity on the use of these items in the original order, the matter was remanded for further discussion.

The Tribunal upheld the Cenvat Credit for aluminum bars but set aside the decision for CRSS coils and other items, remanding the case to the Commissioner (Appeals) for a fresh decision considering the specific use of these items. The judgment referenced a previous Tribunal decision for guidance. The Revenue's appeal was disposed of accordingly.