2015 (1) TMI 1090 - AT - Central Excise

Denial of CENVAT Credit - credit on rough forged rolls - Held that - Observation of Commissioner (Appeals) that Machined rolls made from forged rolls being a essential component of rolling mill and classifiable under Central Excise tariff Chapter Heading 84; thus forged rolls are inputs used for manufacture of specified capital goods i.e. machine rolls and as such are admissible for Cenvat credit in terms of Rule 2(k) of Cenvat Credit Rules, 2004, cannot be found faulted. Therefore, same is upheld - Decided against Revenue.

Summary

Issues:
Appeal against denial of Cenvat credit on rough forged rolls as inputs.

Analysis:
The case involved an appeal by the Revenue against an order where it was held that the respondents could not claim Cenvat credit on rough forged rolls as inputs. The appellant, engaged in manufacturing MS joist and MS billets, had availed 100% Cenvat credit on rough forged rolls during 2006-2010, treating them as inputs for manufacturing capital goods. However, it was found that the rough forged rolls were used in the manufacture of a rolling mill without undergoing any manufacturing process, appearing to be spares/components of the rolling mill. The issue was whether these rough forged rolls should be considered as inputs or capital goods for Cenvat credit purposes.

The Revenue contended that the respondents did not provide sufficient details to prove that the rough forged rolls were used in the manufacture of excisable goods or capital goods. The burden of proof, as per the Cenvat Credit Rules, 2004, was on the respondents to establish the usage of the items. The Revenue argued that the lack of evidence should result in the respondents being penalized and not entitled to Cenvat credit.

The learned Commissioner (Appeals) analyzed the usage of the rough forged rolls and concluded that they should be classified as inputs, not capital goods. The Commissioner noted that the rough forged rolls were processed to become machine rolls, essential components of the rolling mill. The process involved various steps such as chemical testing, machining, grooving, and sizing before the rolls were used in the rolling stand of the mill. Based on this analysis, the Commissioner held that the forged rolls were indeed inputs used for manufacturing specified capital goods, making them eligible for Cenvat credit under Rule 2(k) of the Cenvat Credit Rules, 2004.

The appellate tribunal, after reviewing the Commissioner's findings, upheld the decision that the rough forged rolls should be considered as inputs. It was noted that the Revenue did not challenge the Commissioner's observations, leading to the confirmation that the rough forged rolls were eligible for Cenvat credit. Consequently, the appeal by the Revenue was dismissed, affirming the entitlement of the respondents to claim Cenvat credit on the rough forged rolls as inputs.