2016 (11) TMI 1332 - AT - Central Excise

Denial of CENVAT credit - irregularly credit taken on inputs and capital goods - Rule 7 of CENVAT Credit rules 2002 - Held that - The eligibility of various inputs and capital goods for the purpose of availment of CENVAT Credit has become more broader over the years pursuant to various judgments of Tribunals and other higher courts including the Hon ble Apex Court. On going through the impugned orders it is seen that the adjudicating authority has gone into each disputed issue in detail and arrived at well reasoned finding in respect of the amounts of credit allowed by him. We do not find any infirmities in respect of the credits allowed by adjudicating authority in the impugned orders. - decided against Revenue.

Issues Involved
1. Admissibility of CENVAT Credit on inputs and capital goods used in auxiliary shops.
2. Removal and use of certain goods for captive consumption.
3. Proper declaration of inputs/goods.
4. Availment of credit on welding electrodes used in repairs and maintenance.
5. Credit on high tensile steel scrap used in packing.
6. Credit on non-manufacturing related goods like street light fittings, batteries, etc.
7. Credit on goods moved between stores without declared usage.
8. Credit on aluminum wire rod coils.

Detailed Analysis

1. Admissibility of CENVAT Credit on Inputs and Capital Goods Used in Auxiliary Shops
The adjudicating authority disallowed credit on items used in auxiliary shops, stating that these shops are used for manufacturing/repairing spares and frames for capital goods, which are not leviable to duty. The Tribunal upheld this disallowance, agreeing that auxiliary shops do not contribute directly to the manufacture of dutiable final products.

2. Removal and Use of Certain Goods for Captive Consumption
The adjudicating authority allowed credit on goods like pig iron, coal tar pitch, and steel scrap used in manufacturing operations, based on proper duty-paying documents (IMCNs). However, credit on gases and MS plates used in auxiliary shops or for maintenance was disallowed. The Tribunal found no infirmity in this decision, emphasizing the requirement for proper documentation and usage in the manufacturing process.

3. Proper Declaration of Inputs/Goods
Credit was sought to be denied on inputs described by their brand names or company names. The adjudicating authority did not order recovery of credit, as there was no allegation of diversion or non-use in manufacturing. The Tribunal upheld this decision, noting that the Commissioner correctly directed the assessee to provide a complete write-up on the usage of these items.

4. Availment of Credit on Welding Electrodes Used in Repairs and Maintenance
The adjudicating authority denied credit on welding electrodes used for repairs and maintenance, as no duty is paid on repaired/remade items. The Tribunal agreed with this disallowance, reiterating that credit is not admissible for items used in maintenance activities.

5. Credit on High Tensile Steel Scrap Used in Packing
Credit on high tensile steel scrap used in packing was allowed by the adjudicating authority, despite the goods being received on a stock transfer basis without paying sales tax. The Tribunal upheld this decision, noting that the items were used in the packing of finished products and there were no valid grounds to deny the credit.

6. Credit on Non-Manufacturing Related Goods
Credit on items like street light fittings, batteries, and telephone equipment was disallowed by the adjudicating authority as these were not used in or related to the manufacture of final products. The Tribunal found no merit in the appeals challenging this disallowance, affirming that such items do not qualify for CENVAT credit.

7. Credit on Goods Moved Between Stores Without Declared Usage
The adjudicating authority allowed credit on goods moved between stores, provided there was no allegation of diversion or non-use in manufacturing. The Tribunal upheld this decision, emphasizing the importance of proper documentation and declared usage.

8. Credit on Aluminum Wire Rod Coils
Credit on aluminum wire rod coils was allowed by the adjudicating authority, provided the assessee furnished a proper statement of use. The Tribunal agreed with this allowance, noting that the items were used in the manufacturing process and the assessee complied with the documentation requirements.

Conclusion
The Tribunal dismissed the appeals filed by Revenue, finding no merit in their arguments. The adjudicating authority's decisions on the admissibility of CENVAT credit were upheld, with the Tribunal noting that the issues were well-covered by existing case laws and previous judgments. The appeals were dismissed in toto, affirming the decisions of the adjudicating authority.

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