2017 (1) TMI 1592 - HC - Central Excise

CENVAT credit - inputs - whether structural items such as M.S. Flats, Channels, Plates, Beams, etc., which are used to fabricate structures to house the coal washing plant are covered within the definition of input given in Rule 2(k) of the CCR 2004? - Held that - These inputs have been used to fabricate coal washing plant. The coal washery is an integral part of the unit. There can be no coal washery without the coal washing plant - credit cannot be denied - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
Whether structural items used to fabricate structures for a coal washing plant are covered within the definition of input under Rule 2(k) of the Cenvat Credit Rules, 2004.

Analysis:

The High Court referred to a previous judgment where it was established that the definition of "input" under the Cenvat Credit Rules is broad, including goods used in the manufacture of capital goods. The Court highlighted that items like M.S. Angles, Plates, Joists, and Channels were used for manufacturing essential parts of the factory, meeting the criteria of being capital goods and satisfying the user test. This interpretation was supported by a Supreme Court ruling emphasizing that goods intended for use in the manufacturing process are considered admissible. The Court emphasized that the manufacturing process includes all directly related processes essential for production, not limited to the production process itself.

The Court further discussed a case where a railway track used to transport coal to a thermal plant was considered an input as it was an essential part of the manufacturing process. Applying this principle to the current case, the Court found that the structural items used to fabricate the coal washing plant were integral to the unit, emphasizing that the coal washery could not exist without the coal washing plant. Consequently, the Tribunal's decision in favor of the assessee was deemed justified.

In conclusion, the High Court dismissed the appeal, stating that there was no merit in the arguments presented. The judgment upheld the Tribunal's decision in favor of the assessee, emphasizing the integral role of the structural items in the manufacturing process of the coal washing plant.