2011 (4) TMI 803 - AT - Central Excise

Eligibility of cenvat credit - Cement and steel used for fabrication of storage tank - Held that - Referring to the definition of inputs the inputs used for fabrication of capital goods which are in turn used in the manufacture of excisable goods are treated as inputs - As per the decision of Vandana Global Ltd. vs. CCE, Raipur 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) the inputs used for the manufacture of storage tank has been held to be eligible for cenvat credit taking note of the special treatment provided for storage tank in the definition of capital goods - Hence, cement and M.S.Bars are used in the manufacture of storage tank, held that the appellant was eligible for cenvat credit - Decided in favour of assessee.

Summary

Issues:
Appeal against denial of credit on cement and steel used for fabrication of storage tank.

Analysis:
The appeal before the Appellate Tribunal CESTAT, NEW DELHI was filed by the department challenging the order of the Commissioner (Appeals) that upheld the denial of credit amounting to Rs.1,61,915/- on cement and steel used for the fabrication of a storage tank.

The Advocate for the Appellant argued that the storage tank falls under the definition of capital goods as per Rule 2(a) of Cenvat Credit Rules, 2002. She contended that inputs used for the fabrication of capital goods, which are further used in the manufacturing of excisable goods, are considered as inputs eligible for credit. The Advocate cited the decision of the Larger Bench of the Tribunal in the case of Vandana Global Ltd. vs. CCE, Raipur, emphasizing the eligibility of inputs used in the manufacture of storage tanks for cenvat credit.

On the other hand, the Departmental Representative reiterated the findings of the Commissioner (Appeals) and argued that cement and M.S.Bars used for masonry work in the construction of the storage tank may not be eligible for credit as they are part of the permanent structure. The Departmental Representative also relied on the decision of the Larger Bench in the case of Vandana Global Ltd. vs. CCE, Raipur.

After hearing both sides and examining the records, the Tribunal noted that the storage tank is specifically included in the definition of capital goods under the Cenvat Credit Rules, 2002. It was established that the storage tanks were used in the factory for the manufacture of final products. Referring to para 39 of the judgment of the Larger Bench in the case of Vandana Global Ltd. vs. CCE, Raipur, the Tribunal highlighted the special treatment provided to items like storage tanks under the Cenvat scheme.

Consequently, the Tribunal held that since cement and M.S.Bars were used in the manufacture of the storage tank, the Appellant was indeed eligible for cenvat credit. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief as per the law.