2014 (7) TMI 62 - AT - Central Excise

CENVAT Credit - credit of duty paid of safety shoes - safety shoes worn by the workers in iron & steel factory - nexus with manufacture - Held that - The only reason for disallowance is that safety shoes are not used in the manufacture. No doubt it is not a capital goods but without shoes being worn by the workers carrying out manufacture activity is difficult. Therefore, use of such shoes is indispensable necessity for iron & steel factory where workers move on hot plates. Ensuring health of workers is mandate of Section 7A(2)(c) of the Factories Act, 1948. Once the indispensable necessity is the requirement of welfare legislation and that is also a Central legislation, object thereof cannot be defeated. Such a spirit was also conveyed by Hon ble High Court of Bombay in the case of CCE, Nagpur v. Ultratech Cement Ltd. - 2010 (10) TMI 13 - BOMBAY HIGH COURT and Hero Motorcorp Ltd. v. CCE - 2013 (3) TMI 343 - CESTAT NEW DELHI - Decided in favour of assessee.

Summary

Issues involved: Disallowance of Cenvat credit for safety shoes not used in manufacturing process.

In this case, the issue revolved around the disallowance of Cenvat credit for safety shoes that were not directly used in the manufacturing process. The Appellant's Counsel argued that the use of safety shoes by workers was necessary to comply with the Factories Act, 1948, especially in a hot steel plant environment. The Commissioner (Appeals) had disallowed the credit, stating that the goods were not used in or in relation to the manufacture. The Revenue supported this disallowance, emphasizing the lack of direct use in manufacturing. However, the Tribunal found that the use of safety shoes was essential for the workers' health and safety in an iron & steel factory where they worked on hot plates. The Tribunal noted that ensuring the health of workers is a mandate under the Factories Act, 1948, and cited relevant case laws to support their decision. The Tribunal ultimately allowed the appeal and stay application, recognizing the indispensable necessity of safety shoes for the workers' welfare and health in the manufacturing environment.

Overall, the judgment highlights the importance of upholding welfare legislation, such as the Factories Act, 1948, to ensure the health and safety of workers in industrial settings. It emphasizes that even if certain items like safety shoes may not be directly used in the manufacturing process, their necessity for workers' well-being cannot be undermined. The decision underscores the need to interpret and apply laws in a manner that prioritizes the protection and welfare of workers, even in cases where the direct link to manufacturing activities may not be apparent.