2016 (7) TMI 1101 - AT - Central Excise

Cenvat credit - M.S. Angle, M.S. Channels, CTD Bars, Joists, Flats, Plates, HR Coils, Fish Plates, Aluminium Sheets in coils, oxygen gas, welding electrodes etc. used for fabrication of supporting structure of the capital goods - Held that - Appellant is entitled to avail Cenvat Credit on the disputed inputs viz.,M.S. Angle, MS Channels, CTD Bars, Joists, Flats, Plates, HR Coils, Fish Plates, Aluminium Sheets in Coils, etc. for fabrication of components and accessories viz., Klin, Cooler or Material Handling Systems within the factory premises as capital goods/components/accessories of capital goods for the manufacture of Sponge Iron in the Appellant s manufactory in as much as the test of usage and utility as envisaged in the aforesaid decisions would be the only relevant factory for determining the admissibility of Cenvat credit. Since the Appellant have demonstrated the use of disputed inputs for fabricating the aforesaid capital goods to aid the process of manufacture of Sponge Iron for the purpose of availment of Cenvat Credit, the Order impugned passed by the lower authority is clearly not sustainable on merits. With regard to oxygen gas and welding electrode, the ld. Commissioner (Appeals) has allowed the Cenvat credit to the respondent by placing reliance on the judgment of Hon ble Rajasthan High Court in the case of Hindustan Zinc Ltd. -Vs.- Union of India, (2008 (7) TMI 55 - HIGH COURT RAJASTHAN) and the decision of Mangalore Refinery & Petrochem Ltd., (2007 (7) TMI 166 - CESTAT, BANGALORE). - Decided in favour of assessee.

Summary

Issues:
Appeal against Commissioner's order allowing Cenvat credit on disputed goods for fabrication of supporting structures of capital goods.

Analysis:
The appeal before the Appellate Tribunal CESTAT New Delhi involved a dispute over the eligibility of certain goods, including M.S. Angle, M.S. Channels, CTD Bars, Joists, Flats, Plates, HR Coils, Fish Plates, Aluminium Sheets in coils, oxygen gas, welding electrodes, etc., for Cenvat credit. The appellant contended that these goods were used for the fabrication of supporting structures of capital goods, which they argued did not qualify as either input or capital goods for Cenvat credit purposes. After hearing arguments from both parties and examining the records, the Tribunal noted that the Commissioner (Appeals) had allowed the Cenvat benefit based on the nature of use of the disputed goods by the respondent in its factory premises.

The Tribunal highlighted a relevant paragraph from the impugned order where the Commissioner (Appeals) had concluded that the disputed inputs were used for fabricating components and accessories within the factory premises as capital goods or components/accessories of capital goods for the manufacture of Sponge Iron. The Commissioner had emphasized the test of usage and utility in determining the admissibility of Cenvat credit, and since the appellant had demonstrated the use of the disputed inputs for fabricating capital goods to aid the manufacturing process, the order passed by the lower authority was deemed not sustainable on merits.

Regarding the specific items like oxygen gas and welding electrodes, the Commissioner (Appeals) had allowed the Cenvat credit to the respondent by relying on judicial decisions, including a judgment from the Hon'ble Rajasthan High Court and a decision from the Tribunal in another case. The Tribunal, considering the detailed findings provided by the Commissioner (Appeals) and the supporting judicial pronouncements, found no infirmity in the impugned order. Consequently, the appeal filed by the Revenue was dismissed, affirming the decision to grant Cenvat benefit on the disputed goods for the fabrication of supporting structures of capital goods.