2013 (3) TMI 452 - AT - Central Excise

Cenvat Credit Inputs Capital Goods - Appellate authority is of the opinion that duty paid by the assesse on inputs is not entitled to Cenvat credit. - Assesse submits that inputs namely H.R. Sheets, M.S. Plates and angles were used in fabrication of oil tank which was a capital goods. Tank so fabricated was to serve the purpose of manufacture. That was also not embedded to earth. Held that - Hon ble High Court of Karnataka in case of Commissioner of Central Excise, Bangalore v. SLR Steels Ltd. 2012 (9) TMI 169 - KARNATAKA HIGH COURT examined Rule 2(k) of Cenvat Credit Rule 2004 in para 7 of the judgment and also found that the storage tank was capital goods which made the appellant in that case eligible to input credit. For the fact that the oil tank was not embedded to earth, the appellant is entitled to the Cenvat credit on inputs in the peculiar circumstances of the present case. - Decided in favor of assessee.

Summary

Issues:
1. Interpretation of Central Excise Tariff Act, 1975 regarding classification of goods.
2. Eligibility for Cenvat credit on inputs used in fabrication of capital goods.
3. Application of High Court judgment on similar issue.

Issue 1: Interpretation of Central Excise Tariff Act, 1975 regarding classification of goods

The appellant argued that H.R. Sheets, M.S. Plates, and angles used in the fabrication of an oil tank should be classified as capital goods under Chapter 73 of the Central Excise Tariff Act, 1975. They contended that since the tank was not embedded to earth and could be dismantled for placement elsewhere, it fell within the framework of Chapter 73. The appellant referenced a case before the High Court of Karnataka to support their position.

Issue 2: Eligibility for Cenvat credit on inputs used in fabrication of capital goods

The appellant emphasized that the inputs used in the fabrication of the oil tank, which was considered a capital good, should entitle them to Cenvat credit. They argued that the first appellate order mechanically disallowed the credit without considering the use of inputs in the fabrication process. The appellant pointed out that the emergence of the oil tank as a capital good was an admitted fact under Chapter 73 of the Tariff Act, 1975, and thus, they should not be denied the Cenvat credit on the inputs used.

Issue 3: Application of High Court judgment on a similar issue

The appellant invoked a judgment by the High Court of Karnataka, which examined Rule 2(k) of the Cenvat Credit Rule 2004 and found that a storage tank was considered a capital good, making the appellant eligible for input credit. The High Court's analysis supported the appellant's claim that since the oil tank was not embedded to earth, they were entitled to Cenvat credit on inputs in their specific circumstances. The appellate tribunal allowed the appeal based on these arguments and considerations.

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