2011 (4) TMI 804 - AT - Central Excise

Eligibility of cenvat credit - Joist, M.s.Channel, M.S. Angle, M.S.Rod, M.S.Plate and H.R.Sheets/Coil/Plates - These items as per show cause notice are used Sulphur furnace & Juice Sulphites, Clarifiers, Syrup Sulphites, vapour Pipes, Raw Juice Tank, etc - Held that - Appellants fairly concedes that some of the items may not be eligible for cenvat credit in the light of the decision of Vandana Global Ltd. vs. CCE, Raipur 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) depending upon the actual use of the items - matter requires reconsideration, for examination by the original authority as the original authority has not considered the actual use of various disputed items.

Summary

Issues: Eligibility of cenvat credit on various items used in the manufacturing process.

In this case, the appellants were involved in the manufacture of cane sugar, molasses, and denatured Ethyl Alcohol. The dispute revolved around the eligibility of cenvat credit taken on items like Joist, M.S. Channel, M.S. Angle, M.S. Rod, M.S. Plate, and H.R. Sheets/Coil/Plates, which were used in Sulphur furnace & Juice Sulphites, Clarifiers, Syrup Sulphites, vapour Pipes, Raw Juice Tank, etc. The original authority and the Commissioner (Appeals) denied the credit, stating that these items were used in plant and machinery and could not be treated as capital goods. The appellants argued that while the show cause notice broadly mentioned the use of inputs, it did not specify whether they were converted into parts or components for replacement purposes. They acknowledged that some items might not be eligible for credit based on previous tribunal decisions but contended that many items should qualify for cenvat credit.

The learned Advocate for the appellants conceded that a reconsideration was needed to determine the actual use of the disputed items, as the original authority had not thoroughly examined this aspect. The decision of the authorities was based on the understanding of the law at that time, and it was deemed necessary to reevaluate the end use of the items in light of the decision of the Larger Bench of the Tribunal in a specific case. The Tribunal, after reviewing the show cause notice and the orders of the authorities, concluded that a fresh examination by the original authority was warranted to consider the specific use of the items. Consequently, the Tribunal set aside the orders of the Commissioner (Appeals) and the original authority, remanding the matter back to the original authority for a fresh review. The appellants were granted 45 days to submit written explanations detailing the specific use of the items and the stage at which they were used, such as whether they were converted into parts or components. The original authority was directed to decide the case within three months after the deadline for written submissions, providing a reasonable opportunity for a hearing before making a decision. It was explicitly stated that no opinions had been expressed on the merits of the case, and the appeals were allowed by way of remand for further consideration.