2017 (1) TMI 592 - AT - Central Excise

MODVAT credit - ingot mould car bogie assembly - Held that - I find that these items are used in the factory for transportation of raw materials in semi-furnished form, final products, etc. in the plant without which there cannot be any movement of the material from one division to another Reliance placed in the decision of the case of Jayaswal Neco Ltd. Vs. Commr. of Central Excise, Raipur 2015 (4) TMI 569 - SUPREME COURT , where it was held that railway track was handling system for raw material and processed material. Their use inside plant formed process of manufacturing and the assessee was entitled to take credit for duty paid by them. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against denial of modvat credit on ingot mould car bogie assembly.

Analysis:
The appellant contested the denial of modvat credit amounting to ?3,72,910 on the ingot mould car bogie assembly, arguing its integral role in the production process of steel in Steel Melting Shop I & II. The appellant highlighted the use of the assembly for transportation of hot liquid steel, cold ingots, slag pots, ladles, and rejects within the plant, emphasizing its necessity for material movement between different divisions. The Circular No.276/110/96-TRU clarified that components, spares, and accessories of specified capital goods are eligible for modvat credit, irrespective of their classification under specific chapters. Referring to the decision in Jayaswal Neco Ltd. Vs. Commr. of Central Excise, the Tribunal noted that the use of railway tracks within the plant for transportation of materials formed an integral part of the manufacturing process, entitling the appellant to claim credit for duty paid on them.

The Tribunal observed that the ingot mould car bogie assembly and railway tracks were crucial for material transportation within the plant, directly contributing to the manufacturing process. The decision in Jayaswal Neco Ltd. case emphasized the importance of such infrastructure in facilitating commercial production. The Tribunal differentiated the present case from Sarvesh Refractories Pvt. Ltd. and Gajra Gears Ltd. cases cited by the Revenue, asserting that the eligibility of cenvat credit under the Cenvat Credit Rules, 2004 was the primary consideration. Relying on the Supreme Court's decision in Jayaswal Neco Ltd., the Tribunal allowed the appeal, setting aside the denial of cenvat credit on the ingot mould car bogie assembly.

In conclusion, the Tribunal acknowledged the essential role played by the ingot mould car bogie assembly and railway tracks in the manufacturing process, emphasizing their significance in material transportation within the plant. By aligning with the principles established in the Jayaswal Neco Ltd. case, the Tribunal overturned the denial of cenvat credit, highlighting the eligibility of the appellant to claim credit for duty paid on these integral components.