2015 (11) TMI 1883 - AT - Central Excise

CENVAT Credit - capital goods or inputs - H.R.Coil, plates - G.P. Sheet Plain Plates - Steel Flats - Aluminum Coils - Shape section etc. - HELD THAT - These goods were used in repair/fabrication of machines or as accessories which are required for the purpose of manufacture of sugar. Further the Central Excise Tariff Act, 1985 has specifically indicated, the machines which are used for manufacture of sugar would fall under Chapter heading 84.30. This would indicate that all the machineries that are used in the sugar factory for the manufacture of sugar would fall under heading 8438.20 and eligible for Cenvat credit as capital goods. It that be so, any accessories spares or components used in the repair of manufacture or fabrication of machinery, which is further used for manufacture of sugar and molasses would be eligible for the benefit of Cenvat credit. In M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX THE COMMISSIONER OF CENTRAL EXCISE 2015 (3) TMI 661 - MADRAS HIGH COURT , the Hon ble Madras High Court have held that M.S. Rod, Sheet, M.S. Channel/Plate/flat, etc, used for erection/fabrication of structural support for various machines like Crusher, Kiln, Hooper, etc, without which such structural, machinery could not be erected and would not function, held are eligible for Cenvat credit under Rule 2(a)(A) of CCR, 2004. Appeal allowed - decided in favor of appellant.

Summary

Issues: Denial of Cenvat credit on specific goods used in manufacturing sugar and molasses.

In this judgment by the Appellate Tribunal CESTAT ALLAHABAD, the appellant, a manufacturer of sugar and molasses, appealed against an Order-in-Appeal that confirmed the denial of Cenvat credit on goods like H.R. Coil, plates, G.P. Sheet Plain Plates, Steel Flats, Aluminum Coils, Shape & section, while penalties imposed on the appellant were deleted. The issue revolved around whether these goods could be considered as capital goods or inputs for the manufacturing process. The adjudicating authority upheld the demand denial and penalties, which was partially upheld by the Commissioner (Appeals), leading to this appeal.

The appellant argued that the goods in question were used in the factory for machines or repair & fabrication of machinery producing sugar and molasses. The appellant cited precedents such as the case of Uttam Sugar Mills Vs CCE Ghaziabad and Simbholi Sugar Mills to support their claim. On the other hand, the Departmental Representative contended that these items did not directly contribute to the production of sugar.

After considering the submissions, the Tribunal analyzed the specific uses of the items in the factory, such as Aluminum Coil for lagging, H.R. Coil Plates for carriers and elevators, G.P. Sheet for steam line lagging, among others. The Tribunal noted that these goods were used in repair/fabrication of machines or as accessories necessary for manufacturing sugar. Referring to the Central Excise Tariff Act, the Tribunal highlighted that machinery used for sugar production falls under specific headings, making them eligible for Cenvat credit as capital goods. The Tribunal relied on the decisions in the cases of Uttam Sugar Ltd. and Simbhaoli Sugar Ltd., which were upheld by the Supreme Court.

Citing the case of India Cement Ltd. Vs Cestat Chennai, the Tribunal emphasized that goods like M.S. Rod, Sheet, M.S. Channel/Plate/flat used for structural support in machinery erection are eligible for Cenvat credit. Based on the precedents and legal provisions, the Tribunal set aside the impugned order denying Cenvat credit to the appellant on the goods in question. The appeal was allowed with consequential benefits granted to the appellant.