2014 (2) TMI 1093 - AT - Central Excise

Duty demand - Availment of Cenvat credit on RAILS falling under Chapter 73 of CETA - Held that - appellant availed Cenvat credit on Rails as capital goods. The appellants are engaged in the manufacture of Fish Plates, etc. They have to send the material in the furnace and hot rolled fish plates come after moving on the Rails. Therefore the rolls are the components of the capital goods and they rightly fall under the purview of capital goods. The Department could not produce any evidence that these rolls are used for structural or for installation purposes. Therefore, they are eligible for Cenvat credit. The appellant have paid the interest on the 50% of the Cenvat credit availed by them as they were not entitled for full 100% of Cenvat credit - Decided in favour of assessee.

Summary

Issues:
1. Appeal against order-in-appeal confirming demand of Rs. 1,54,991.00 with penalty.
2. Entitlement to Cenvat credit on "RAILS" as capital goods.
3. Interpretation of sub-rule (3) of Rule 2A of Cenvat Credit Rules, 2002.
4. Applicability of judicial precedents and circulars.
5. Comparison with Larger Bench decision in Vandana Global Ltd. case.
6. Eligibility for Cenvat credit on Rails as components of capital goods.

Analysis:

1. The appellant filed an appeal against order-in-appeal confirming a demand of Rs. 1,54,991.00 along with interest and penalty. The ld. Commr. (Appeal) upheld the Lower Adjudicating Authority's order, leading to the current appeal.

2. The case revolved around the appellant's entitlement to Cenvat credit on "RAILS" as capital goods under Chapter 73 of CETA, 1985. The Department contended that the appellant was not eligible for the credit as Rails did not fall under the definition of capital goods.

3. The appellant argued that Rails were essential components for their manufacturing process, falling under sub-rule (3) of Rule 2A of Cenvat Credit Rules, 2002. They cited the Hon'ble Supreme Court's judgment and relevant Board Circulars to support their contention.

4. The appellant relied on judicial precedents and circulars to establish their claim for Cenvat credit on Rails. They referenced the case of Commr. of Central Excise v. Jawahar Mills Ltd. and Board Circulars to bolster their argument.

5. The Respondent, represented by the Ld. A.R., cited a Larger Bench decision in the case of Vandana Global Ltd. to argue against the appellant's claim. The issue of whether Rails constituted parts and components of machinery was crucial in this comparison.

6. After considering the submissions and records, the Tribunal found that the Rails were indeed components of the capital goods used in the manufacturing process. The Department failed to provide evidence that the Rails were used for structural or installation purposes, thereby upholding the appellant's eligibility for Cenvat credit. The appeal was allowed, and the order of the ld. Commissioner (Appeals) was set aside.

This comprehensive analysis of the judgment highlights the key issues, arguments presented by both sides, legal interpretations, and the final decision rendered by the Tribunal.