2017 (6) TMI 1279 - HC - Central Excise

CENVAT credit - inputs - MS items/steel items used for repair and maintenance of storage tanks - HR Sheet Plates HR Sheet and Plates used for repair and maintenance activity of the storage tanks - nexus with the final product - Held that - The decision rendered turned entirely on facts and no question of law much less a substantial one arises for consideration in this appeal. All the more so when the Tribunal being the final fact finding authority opined that repair and maintenance of storage tanks formed an integral part of the manufacturing process of the respondent company. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Whether the orders of the Hon'ble Tribunal upholding the credit on MS items/steel items used for repair and maintenance of storage tanks are correct and legal?
2. Whether HR Sheet Plates, HR Sheet, and Plates used for repair and maintenance activity of storage tanks can be termed as inputs?
3. Can Cenvat credit be availed on inputs like HR Sheet Plates, HR Sheet, and Plates which have no relation to the manufacture of the final product?

Analysis:
1. The appeal by the Revenue under Section 35G of the Central Excise Act, 1944 raised substantial questions of law regarding the admissibility of input credit on MS items used for repair and maintenance of storage tanks. The Tribunal upheld the finding that repair and maintenance of storage tanks formed an integral part of the manufacturing process, making the input credit admissible. The Tribunal's decision was based on factual findings, and no substantial question of law arose for consideration. Therefore, the appeal was dismissed.

2. The Commissioner of Customs and Central Excise initially dismissed the claim of the respondent company for input credit on MS items used for repair and maintenance of storage tanks. However, the Commissioner (Appeals) ruled in favor of the respondent company, allowing the input credit based on a series of judgments. The Tribunal concurred with the Commissioner (Appeals) that the steel items used for repair and maintenance of storage tanks were eligible for input credit as they were integral to the manufacturing process. The Tribunal's decision highlighted that the repair and maintenance of storage tanks were essential to prevent seepage and were part of the manufacturing process, justifying the admissibility of input credit.

3. The Tribunal's analysis emphasized that the repair and maintenance of storage tanks, involving the use of steel items, were crucial for the manufacturing process of the respondent company. The Tribunal's decision aligned with the definition of input in the Cenvat Credit Rules, 2004, stating that such activities were integral to the manufacturing process. As a result, the Tribunal upheld the admissibility of input credit on steel items used for repair and maintenance of storage tanks. The judgment reinforced the importance of considering the practical aspects of manufacturing processes in determining the eligibility for input credit, even if there was a contrary Board's Circular on the matter.

This comprehensive analysis of the judgment highlights the key issues raised, the decisions made at different stages of the case, and the final outcome based on the Tribunal's findings regarding the admissibility of input credit on steel items used for repair and maintenance of storage tanks.