2015 (8) TMI 1179 - AT - Central Excise

Eligibility of CENVAT credit - Steel plates, angles, channels, parts, components and accessories of capital goods, welding electrodes and storage rack - penalty under Rule 15(1) of CENVAT Credit Rules, 2004 - Held that - The steel plates, angles are used for fabrication of raw mill hooper, fabrication of belt conveyor systems, fabrication of transfer tower, parts of boiler, fabrication of grating material for belt conveyor bottom etc. Further, as per the capital goods are concerned, they are used as parts and components. I find that the Bangalore Bench of this Tribunal in the appellant s own case, allowed the credit on these items. - The ratio of the Hon ble Madras High Court 2014 (10) TMI 637 - MADRAS HIGH COURT squarely applies to the present case and the decisions relied on by the learned AR for Revenue are not applicable to the present case. Respectfully following the judgment of the Hon ble Supreme Court 2006 (11) TMI 551 - SUPREME COURT OF INDIA and the Hon ble High Court of Madras, I hold that the appellants are eligible for CENVAT credit on MS Steel plates, channels, angles, welding electrodes, storage racks which are used for manufacture of various capital goods and also parts and components which are used in the capital goods. Accordingly, the impugned orders are set aside - Decided in favour of assessee.

Summary

Issues:
Eligibility of CENVAT credit on steel plates, angles, channels, parts, components, and accessories of capital goods, welding electrodes, and storage rack.

Detailed Analysis:

Issue 1: Eligibility of CENVAT credit on various items
The dispute revolved around the eligibility of CENVAT credit on steel plates, angles, welding electrodes, and storage racks. The adjudicating authority had disallowed the credit and imposed penalties under Rule 15(1) of CENVAT Credit Rules, 2004. The Commissioner (Appeals) upheld the decision, leading to the present appeals challenging the disallowance of credit.

Issue 2: Appellant's arguments
The appellant's counsel presented a detailed argument, emphasizing the usage of various items like steel plates, MS flats, angles, and welding electrodes in the fabrication of raw mill hooper, cement machinery parts, and storage of machinery components. The counsel referred to the definition of input under CENVAT Credit Rules, 2004, and cited precedents supporting the eligibility of credit on similar items. The counsel also highlighted a stay order by the Tribunal in favor of the appellants.

Issue 3: Revenue's arguments
On the other hand, the Revenue's representative contested the appellant's claims, relying on the definition of inputs before 31.3.2011 to argue against the eligibility of credit on certain items. The Revenue cited Tribunal decisions and a Supreme Court case to support the denial of credit on welding electrodes and steel structures.

Issue 4: Tribunal's analysis and decision
After considering both parties' arguments and reviewing the records, the Tribunal focused on the admissibility of credit on the disputed items. The Tribunal observed that the appellants had taken CENVAT credit on parts and accessories of capital goods during specific periods, listing out the usage of each item. The Tribunal referred to its earlier order in the appellant's case where credit on similar items was allowed. Additionally, the Tribunal cited relevant judgments, including one by the Supreme Court, supporting the eligibility of credit on steel sheets used in manufacturing components and parts.

Conclusion:
Based on the analysis and precedents, the Tribunal concluded that the appellants were entitled to CENVAT credit on items like MS steel plates, channels, angles, welding electrodes, and storage racks used in manufacturing capital goods and their components. The Tribunal set aside the impugned orders, allowing the appeals in favor of the appellants. The decision was influenced by the judgments of the Supreme Court and the Madras High Court, which supported the eligibility of credit on the disputed items.