2016 (11) TMI 926 - AT - Central Excise

CENVAT credit - MS plates, MS angles, MS channels, MS sheets - whether the appellant is eligible for credit availed on MS items which according to the appellant were used for fabrication of parts/accessories/components of capital goods and also for repair and maintenance of various machinery and equipment? - Held that - On perusal of the list showing the purpose for which the subject items were used by the appellant, it is seen that the MS channels were used for repairs/maintenance of L.S. crusher hoos, cooler MCDC dust etc. which are machinery used in the manufacture of cement. Plates were used in cooler, MCDC ducts, hot air ducts, hoopers, wagon tippler etc., elevator chains were used in the cement mill bucket elevators and MN castings were used in grate cooler. Similarly hydraulic nut was used in the cement mill and dumper assembly used in dumper which is part of the handling equipment. These descriptions show that the MS items were either used for fabricating the parts / components / accessories of capital goods or for repair and maintenance of such machinery and equipment. The issue whether MS items used for fabrication of capital goods / accessories or components and also whether they can be used for repair and maintenance is no longer res integra. The issue stands settled by the decisions relied upon by the appellant as well as by the decisions passed by the Tribunal in the case of Madras Cements Ltd. Vs. CCE, Hyderabad 2016 (6) TMI 761 - CESTAT HYDERABAD - the appellant is eligible for the credit - appeal allowed - decided in favor of appellant.

Summary

Issues: Eligibility of CENVAT credit on MS items used for fabrication of capital goods and repair/maintenance of machinery.

Analysis:
1. Background: The appellants availed CENVAT credit on MS items under the category of capital goods. The Department issued a show-cause notice alleging that MS items do not fall under the definition of capital goods, proposing recovery of credit, interest, and penalty. After adjudication, the original authority allowed partial credit, which was further reduced by the Commissioner (Appeals).

2. Appellant's Argument: The appellant contended that MS items were used for fabrication of parts/components of capital goods and for machinery repair/maintenance. Cited precedents like Madras Cements Ltd. vs. CCE, Hyderabad and India Cements Ltd. vs. CESTAT, Chennai to support eligibility of credit on MS items for such purposes.

3. Department's Argument: The AR argued that the appellant failed to produce sufficient documents proving the purpose of MS items usage within the factory. Emphasized the need for issue slips, work orders, and other evidence to substantiate the usage claim. Reiterated the findings of the impugned order and supported the penalty reduction by the Commissioner (Appeals).

4. Judgment: The Tribunal analyzed the contentions and evidence presented. The issue at hand was whether the appellant was eligible for credit on MS items used for fabrication of capital goods or machinery repair/maintenance. The appellant provided detailed replies, annexures, and letters explaining the usage of MS items for specific machinery components. The Tribunal noted that the MS items were utilized for repairing/maintaining machinery crucial in cement manufacturing, confirming their eligibility for credit. Referenced various decisions and settled precedents supporting the appellant's claim. Consequently, the Tribunal held the appellant eligible for credit, setting aside the impugned order and allowing the appeal with any consequential reliefs.

This detailed analysis of the judgment showcases the legal arguments, evidentiary requirements, and precedents considered by the Tribunal in determining the eligibility of CENVAT credit on MS items for the appellant.