2016 (12) TMI 1049 - AT - Central Excise

Availability of Cenvat credit - items namely H.R. Plates, M.S. Plates, M.S. Angles, Joints, Channels etc. used by the appellant manufacturer in fabrication of capital goods, staging structures and/or supporting structures of the machinery during the period from June, 2006 to January, 2007 - Held that - I am satisfied that the Revenue have not disputed the contention of the appellant that they have fabricated several capital goods as their factory was under expansion. Further, as per the grounds of the Revenue, even if the, appellant have fabricated staging structure and supporting structures the same are eligible for Cenvat credit in view of the Ruling of Hon ble Madras High Court in India Cement Ltd. 2015 (3) TMI 661 - MADRAS HIGH COURT . Accordingly, the appeal of Revenue is dismissed - decided in favor of respondent-assessee.

Summary

Issues: Availability of Cenvat credit on items used in fabrication of capital goods, staging structures, and supporting structures.

Analysis:

1. Issue of Cenvat Credit Eligibility:
The appellant filed an appeal against Orders-in-Appeal passed by the Commissioner of Central Excise & Customs regarding the availability of Cenvat credit on various items used in fabrication. The appellant claimed to have used items like H.R. Plates, M.S. Plates, M.S. Angles, Joints, Channels, etc., in the fabrication of capital goods, staging structures, and supporting structures from June 2006 to January 2007. The Commissioner initially imposed penalties under Cenvat Credit Rules, 2004, which were contested by the appellant. The Commissioner (Appeals) allowed the appeals, citing Rule 2(k) of Cenvat Credit Rules, 2004, which clarifies that inputs used in the manufacture of capital goods are eligible for Cenvat credit. The Tribunal upheld this decision, emphasizing that the appellant had indeed used the disputed items for the fabrication of capital goods, making them eligible for Cenvat credit.

2. Dispute Over Fabrication of Structures:
The Revenue challenged the decision of the Commissioner (Appeals) by arguing that the items in question were used in the fabrication of staging and supporting structures, which do not qualify as capital goods under Cenvat Credit Rules, 2004. The Revenue contended that the use of these items for manufacturing capital goods was not established. However, the appellant's counsel referred to a ruling by the Hon'ble High Court of Madras in the case of India Cement Ltd., which held that inputs used in fabricating structures to support machinery are eligible for Cenvat credit under Rule 2(a) of Cenvat Credit Rules, 2004. The Tribunal agreed with this interpretation and dismissed the Revenue's appeal, stating that even if staging and supporting structures were fabricated, they were eligible for Cenvat credit based on the Madras High Court ruling.

3. Final Decision and Consequential Benefits:
After considering the arguments from both sides, the Tribunal concluded that the appellant had indeed fabricated capital goods during the expansion of their factory. The Tribunal also noted that the Revenue did not dispute this fact. In light of the Madras High Court ruling, the Tribunal upheld the eligibility of the appellant for Cenvat credit on the disputed items. Consequently, the appeal of the Revenue was dismissed, and the respondent assessee was deemed entitled to any consequential benefits according to the law. The Tribunal also disposed of any cross objections raised in the case.