2013 (11) TMI 881 - AT - Central Excise

Eligibility for cenvat credit on MS Angles, Channels, Bars and Plates - Assessee contended that the steel items were used in fabrication of various components of machinery Held that - The Assistant Commissioner has given a clear finding based on the verification report of the Superintendent that the steel items, has been used as components of machinery classifiable under Chapter 84 - the items have been used in the machinery which are permanently embedded to the earth are eligible for Cenvat credit - Following Jodhpur Alloys Pvt. Ltd. vs. CCE, Jaipur 2013 (11) TMI 842 - CESTAT NEW DELHI - the steel items, have been used as components of the machinery, it is not material whether that machinery is fixed to the earth/embedded in the earth or otherwise Decided against revenue.

Issues: Eligibility for Cenvat credit on steel items used in machinery fixed to earth.

Analysis:
The case involved a dispute regarding the eligibility of the respondent, a manufacturer of zinc and non-ferrous metals, for Cenvat credit amounting to Rs. 4,19,515/- in respect of steel items like MS Angles, Channels, Bars, Plates, etc., used in machinery during the period from March 2007 to March 2008. The department contended that the respondent was not entitled to the credit and issued a show cause notice for recovery along with interest and penalty. The matter was initially adjudicated by the Assistant Commissioner, who, after verifying that the steel items were used as components of machinery classifiable under Chapter 84, dropped the proceedings in favor of the respondent. However, the department filed a review appeal against this decision before the Commissioner (Appeals), who upheld the Assistant Commissioner's order, leading to the Revenue's appeal before the Tribunal.

During the hearing, the Revenue argued that the steel items were not used for the fabrication of capital goods but in machinery permanently embedded in the earth, making them ineligible for Cenvat credit. On the other hand, the respondent's counsel emphasized that there were clear findings confirming the use of steel items as components and spares of machinery, as upheld by both the Assistant Commissioner and the Commissioner (Appeals). The counsel cited relevant judgments to support the contention that the fixation of machinery to the earth did not affect the eligibility for Cenvat credit as long as the items were used in the factory and met the definition of capital goods under the Cenvat Credit Rules.

After considering the arguments and reviewing the records, the Tribunal found that the findings of the Assistant Commissioner and the Commissioner (Appeals) clearly established that the steel items were indeed used as components of machinery, regardless of whether the machinery was fixed to the earth. The Tribunal referred to precedents to support the position that the fixation of machinery to the earth did not impact the eligibility for Cenvat credit as long as the items met the criteria for capital goods. Consequently, the Tribunal dismissed the Revenue's appeal, affirming the decision in favor of the respondent.

In conclusion, the judgment clarified the eligibility criteria for Cenvat credit on steel items used in machinery, emphasizing that the crucial factor was whether the items were used as components of machinery classifiable under relevant chapters, rather than their specific installation status within the factory premises.

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