2008 (2) TMI 384 - AT - Central Excise

Availability of capital goods Cenvat credit - Credit on M.S. angles, MS plates, Channels, rods, beams, HR plates, HR coils & AI coils used by the appellants in the fabrication of sugar manufacturing equipment and structures such items becomes part and parcel of machinery so they are entitled for Modvat credit as capital goods in respect of items used for construction of steel structure of the factory shed, asessee is not eligible for Cenvat credit

Summary

Issues:
1. Denial of Cenvat credit for wrongly availing credit on disputed items.
2. Classification of items as capital goods or inputs for modvat credit eligibility.
3. Interpretation of judgments on structural items used in the manufacture of capital goods.
4. Consideration of evidence for items used in the manufacture of sugar manufacturing equipment and structures.

Analysis:
1. The appeal originated from an Order in Appeal confirming the demand for wrongly availing Cenvat credit on disputed items. The appellants conceded a portion of the demand related to items used for the construction of a factory shed. The issue of wrongly availing credit was addressed in a Final Order where the Bench allowed the appeal in favor of the assessee based on various judgments.

2. The appellant contended that the disputed items should be considered as capital goods or, alternatively, as inputs eligible for modvat credit. The appellant cited numerous case laws to support their claim that structural items used in the manufacture of capital goods qualify for modvat credit. They argued that denial of credit on these items was unjustified, citing specific provisions and decisions supporting their entitlement to modvat credit.

3. The Tribunal reviewed the impugned items, including M.S. angles, plates, channels, rods, beams, and coils, used in the fabrication of sugar manufacturing equipment and structures. Citing previous judgments, the Tribunal held that structural items supporting machinery are entitled to modvat credit. The Tribunal referenced specific cases where similar items were deemed eligible for modvat credit as capital goods, emphasizing the integral role of these items in machinery functioning.

4. The Commissioner's order was challenged on the grounds of not considering the evidence presented by the appellants regarding the use of items in the manufacture of sugar manufacturing equipment and structures. The Commissioner's decision to classify the items under a general category was disputed, with the appellants arguing that the items were essential components of machinery. The Tribunal reiterated its previous ruling on a similar case, upholding the appellants' eligibility for Cenvat credit on items integral to the machinery's functioning.

In conclusion, the Tribunal allowed the appeal, emphasizing the eligibility of structural items used in the manufacture of capital goods for modvat credit. The decision highlighted the importance of considering the specific role and integration of items in machinery while determining their classification for credit eligibility.