2016 (6) TMI 1009 - AT - Central Excise

Cenvat Credit on MS Angles, Channels, MS Plates etc., as capital goods - The appellant is engaged in manufacture of writing and printing paper, newprint and krafts paper. - Held that - credit on MS items used for fabrication in repairs and maintenance of capital goods within the factory allowed. - Decided in favor of assessee.

Summary

Issues:
Denial of CENVAT Credit of duty paid on MS Angles, Channels, MS Plates, MS Beams, Joists, Chequered plates, etc., as capital goods.

Analysis:

Issue 1: Denial of CENVAT Credit
The appellant, engaged in the manufacture of various types of paper, availed credit on MS Angles, Channels, MS Plates, etc., as capital goods. The period involved in the appeals ranged from July 2008 to March 2009, with disputed amounts of credit in two separate appeals. The appeals were filed against the Commissioner (Appeals) orders confirming the demand for the credit amounts along with interest and penalties.

Issue 2: Arguments of the Appellant
The appellant's counsel argued that the subject items were used for the erection of capital goods like Boilers, Paper Machines, Pulp Machinery, and Fuel Conveyor Systems. The appellant contended that the denial of credit was unfounded, as the MS items were utilized as spares, components, and accessories of capital goods. It was emphasized that the subject items were integral to the functioning of capital goods such as Boilers and Paper Machines.

Issue 3: Arguments of the Respondent
The Assistant Commissioner supported the findings in the impugned order, highlighting an amendment that disallowed credit on MS items and cement used for supporting capital goods. Referring to a previous Tribunal decision, the respondent argued that the denial of credit was justified based on the retrospective nature of the amendment.

Issue 4: Tribunal's Analysis and Decision
The Tribunal considered the submissions made by both parties. It was observed that the subject items, when used for erecting/fabricating capital goods, became essential components of such machinery. The Tribunal distinguished a previous decision and cited various judgments to support the admissibility of credit on MS items used for the fabrication and erection of capital goods. Notably, the Tribunal referred to cases where credit on MS items for erection and maintenance of capital goods was allowed, emphasizing the essential role of such items in the manufacturing process.

Conclusion
The Tribunal held that the appellant was eligible for the credit availed on the subject items. Consequently, the impugned orders were set aside, and the appeals were allowed with any consequential reliefs. The Tribunal's decision was based on the essentiality of the MS items in the erection and functioning of capital goods, in line with established legal precedents and judgments supporting the admissibility of such credits.