2013 (11) TMI 743 - AT - Central Excise

Corrugated Ply, M.S. Beam, Channels, TMT Bars, Angles Capital goods or Input - Eligibility to avail Cenvat credit Assessee manufactured Flanges and Fittings - Whether the inputs can be considered as capital goods or input Held that - The inputs on which CENVAT Credit was taken, may not qualify to be capital goods, in strict sense, but can be qualified as input for manufacturing of excisable goods under the provisions of Rule 2(k) of CENVAT Credit Rules, 2004 Relying upon KISAN SAHKARI CHINI MILLS LTD. Versus COMMISSIONER OF C. EX., MEERUT-II 2009 (10) TMI 742 - CESTAT NEW DELHI - an assessee is eligible to avail CENVAT Credit of the items under input category, it cannot be denied on the ground that the credit was claimed as capital goods - The appellant has demonstrated by producing Chartered Engineer s certificate that the items on which CENVAT Credit was availed, were, in fact, used for fabrication or manufacture of capital goods which were further consumed by them thus CENVAT Credit cannot be denied to the appellant Decided in favour of Assessee.

Summary

Issues:
1. Whether CENVAT Credit availed by the appellant on certain items under the heading of capital goods is proper.
2. Whether the items in question can be considered as capital goods or inputs for manufacturing excisable goods.

Analysis:
Issue 1:
The appellant, engaged in the manufacture of Flanges and Fittings, availed CENVAT Credit on items like Corrugated Ply, M.S. Beam, Channels, TMT Bars, and Angles falling under specific chapters of the Central Excise Tariff Act. A show cause notice was issued for demanding the CENVAT Credit amount, interest, and penalties. The lower authorities confirmed the demand, leading to this appeal. The appellant argued that the items were used in the fabrication of machinery, making them inputs for manufacturing capital goods. The appellant relied on precedents to support their claim that even if initially declared as capital goods, items can be considered inputs for availing credit.

Issue 2:
The Tribunal examined the factual matrix and found that the appellant had used the disputed items in the manufacture of their own capital goods, as certified by a Chartered Engineer. The definition of "input" during the relevant period was crucial, as it included goods used in the manufacture of capital goods further used in the factory. The Tribunal referred to a previous case to establish that even if items were initially claimed as capital goods, they could be considered inputs for availing credit. The Tribunal held that the appellant demonstrated the use of items in manufacturing capital goods, justifying the availed CENVAT Credit. Therefore, the impugned order was set aside, and the appeal was allowed.