2014 (3) TMI 311 - AT - Central Excise

Denial of CENVAT Credit - supporting structures were purchased by the respondent as part of sugar plant - Held that - in the case of India Cements Ltd. (2013 (5) TMI 403 - CESTAT CHENNAI) the issue came before this Tribunal wherein this Tribunal has held that as these structures were purchased as part of the plant are entitled for CENVAT credit. In this case CENVAT credit to tune of ₹ 8,31,627/- were taken by the respondent for cane carrier, cane unloader, gantry girder assembly, centrifugal machinery, boiler, sugar mill, juice tank, sugar storage bins. These items cannot be terms as supporting structures, therefore, credit cannot be denied. Further the credit has been taken for structure and part of sugar machinery and equipment to the tune of ₹ 6,21,000/-. No where it is coming from the facts that these structure are supporting structure for erection of plant and machinery at the site of the respondent - Decided against Revenue.

Summary

Issues:
Appeal against dropping the demand for denying CENVAT Credit on supporting structure.

Analysis:
The appeal was filed by the revenue against an order where the demand to deny CENVAT Credit on supporting structures was dropped. The respondents, manufacturers of sugar and molasses, had entered into an agreement with a supplier for plant machinery and supporting structures. The revenue contended that CENVAT credit for supporting structures was not admissible. However, both lower authorities dropped the demand based on precedents. The revenue challenged this decision.

The revenue argued that supporting structures did not qualify as components, spares, or accessories of capital goods under Rule 57AA. They cited a Supreme Court decision to support their claim that CENVAT credit for supporting structures should be denied. On the other hand, the respondent's counsel contended that the supporting structures were purchased as part of the sugar plant and were admissible for CENVAT Credit. They referenced agreements and previous judgments to support their stance.

The tribunal noted that the supporting structures were not erected in the respondent's factory but were purchased as part of the sugar plant. Drawing a distinction from previous cases, the tribunal held that the supporting structures were eligible for CENVAT Credit. They referenced a tribunal decision supporting the admissibility of CENVAT Credit for structures purchased as part of a plant. The tribunal found that the structures in question were not merely supporting structures but integral parts of the sugar machinery and equipment, thus upholding the respondents' right to claim CENVAT Credit.

In conclusion, the tribunal upheld the impugned order, dismissing the revenue's appeal. The decision was based on the fact that the supporting structures were purchased as part of the sugar plant and were eligible for CENVAT Credit. The judgment emphasized the distinction between supporting structures and integral parts of the plant machinery, affirming the respondents' entitlement to the credit.

End of Analysis