2017 (3) TMI 223 - AT - Central Excise

CENVAT credit - MS ingots, angles, channels etc - Held that - All these items fall either in the definition of capital goods or under the category of parts/components/accessories of capital goods. Without such fabrication of parts/components/accessories of capital goods the activity of manufacture cannot be carried out - In Monnet Ispat and Energy Ltd., Vs CCE, Raipur 2016 (1) TMI 917 - CESTAT NEW DELHI the Tribunal had occasion to consider the eligibility of credit of MS items used for fabrication of components/accessories of various machineries used in the activity of manufacture - credit on MS items allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Alleged irregular availment of CENVAT Credit under capital goods.

Analysis:
The case involved the appellants engaging in the manufacture of various items and availing CENVAT Credit on inputs and capital goods. A show cause notice was issued, alleging irregular availment of CENVAT Credit under capital goods for a specific period. The original authority confirmed the demand, imposed penalties, and interest. The appellants appealed to the Commissioner (Appeals), who upheld the decision, leading to the current appeal.

Appellant's Argument:
The appellant's counsel argued that the MS items were used for fabricating components/parts/accessories of capital goods, falling within the capital goods definition. They maintained detailed records of the MS items received and used for fabrication, emphasizing compliance with procedures. The appellant referenced legal judgments supporting their position, highlighting that the MS items were essential for the manufacturing process and thus eligible for credit.

Respondent's Argument:
The respondent reiterated the findings of the impugned order, stating that the items in question did not qualify as inputs or capital goods. Lack of proper records regarding the fabrication of parts/components/accessories of capital goods was cited as a reason for disallowing the credit.

Judgment:
Upon reviewing the documents and registers recovered during inspection, it was evident that the MS items were crucial for various manufacturing processes, such as supporting machinery, laying conveyor belts, and other essential functions. Legal precedents were cited to support the eligibility of credit for MS items used in fabricating components/accessories of machinery. The judgment concluded that the credit availed on MS items should be allowed, setting aside the impugned order and granting the appeal with any consequential reliefs.

This comprehensive analysis of the legal judgment highlights the issues, arguments presented by both parties, and the final decision rendered by the tribunal.