2014 (4) TMI 87 - AT - Central Excise

Availment of CENVAT Credit - Whether during the period from December 2007 to June 2010, the appellant would be eligible for Cenvat credit in respect of MS Angles, channels, plates, bars etc. used for fabrication of structural supports for induction furnace, fabrication and making of storage tanks, embedded in the earth, fabrication of EOT cranes and for repair and maintenance of inner and outer walls of the induction furnace - Held that - Steel items used in repair of outer and inner wall of the induction furnace, the same being used in the repair and maintenance of the capital goods would be eligible for Cenvat credit, in view of judgment of Ambuja Cements Ltd. vs. Union of India (2009 (7) TMI 24 - CHATTISGARH HIGH COURT) and also the judgment of Hon ble Rajasthan High Court in the case of Union of India vs. Hindustan Zinc Limited reported in 2008 (8) TMI 267 - RAJASTHAN HIGH COURT . As regards the steel items used in fabrication of EOT cranes, I am of the prima facie view that the same would be eligible for Cenvat credit as the EOT cranes are capital goods. The only items which do not appear to be recovered by the definition of capital goods are the supporting structures for the furnace and the storage tanks embedded in the earth. However, I take note of the fact that in respect of storage tank embedded in the earth, there is judgment of Hon ble Karnataka High Court in the case of CCE, Mysore vs. ICL Sugars Ltd. (2011 (4) TMI 1065 - KARNATAKA HIGH COURT) holding that the storage tanks in a sugar mill even if embedded in the earth are capital goods in terms of the definition of this term as given in Rule 57Q of the Erstwhile Central Excise Rules - At this prima facie stage, this does not appear to be a case for total waiver - Conditional stay granted.

Summary

Issues:
Eligibility of Cenvat credit for various steel items used in manufacturing processes.

Analysis:
The appellant, a manufacturer of CI casting chargeable to Central Excise duty, availed Cenvat credit for steel items used in fabrication of structural supports for induction furnace, storage tanks, EOT cranes, and repair of inner and outer walls of the furnace. The department disputed the eligibility of Cenvat credit for these items and issued a show cause notice. The Deputy Commissioner confirmed the demand for Cenvat credit along with interest and penalty. On appeal, the Commissioner (Appeals) upheld the decision, leading to the current appeal.

The appellant argued that the steel items used in various processes should be eligible for Cenvat credit based on judicial precedents. They cited judgments from different High Courts supporting their claim. The appellant requested a waiver of pre-deposit for the Cenvat credit demand, interest, and penalty until the appeal's disposal.

The Departmental Representative opposed the stay application, emphasizing that the steel items were not eligible for Cenvat credit as they were used for supporting structures or maintenance, not considered capital goods. The representative relied on Tribunal and Apex Court judgments to support their stance and contended that the extended period was correctly invoked.

After considering both parties' submissions and reviewing the record, the judge ruled on the eligibility of Cenvat credit for the steel items in question. The judge found that steel items used in repair of the furnace's walls and fabrication of EOT cranes were eligible for Cenvat credit based on relevant judgments. However, the judge noted that supporting structures for the furnace and storage tanks embedded in the earth might not qualify as capital goods. The judge directed the appellant to deposit a specific amount within a stipulated period, with the balance of the Cenvat credit demand, interest, and penalty waived until the appeal's disposal.

In conclusion, the judgment addressed the eligibility of Cenvat credit for specific steel items used in manufacturing processes, considering arguments from both parties and relevant legal precedents to reach a decision on the waiver of pre-deposit and stay of recovery pending appeal.