2017 (3) TMI 544 - AT - Central Excise

CENVAT credit - manufacturer of boiler, its components, parts and accessories - whether the goods fall under 84029020 or under 7308.90? - Held that - Cenvat Credit will be available to M/s. Monnet Ispat Ltd. for the entire boiler which is undoubtedly capital goods. The various parts and components cleared in dis-assembled form should be classifiable under 8402 and would be entitled to Cenvat Credit. Even goods such as angles, channels, sections, etc. which are classifiable under chapter 73 and are used for fabrication in the factory for manufacture of supporting structures which ultimately become part of the boiler would also be eligible for Cenvat Credit - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of goods under Central Excise Tariff Act, eligibility of Cenvat Credit for supporting structures, imposition of penalties.

Detailed Analysis:
1. Classification of Goods: The case involved the classification of goods supplied by M/s. Cethar Vessels Pvt. Ltd. to M/s. Monnet Ispat Ltd. The controversy arose when the Directorate General of Central Excise Intelligence (DGCEI) officers visited the factories and noted that certain parts and components supplied were being classified under a different category than what the revenue deemed appropriate. The dispute centered around whether these parts should be classified under Chapter heading 8402 or 7308.90.

2. Eligibility of Cenvat Credit: The main issue was the eligibility of Cenvat Credit for the supporting structures supplied by M/s. Cethar Vessels Pvt. Ltd. to M/s. Monnet Ispat Ltd. The Commissioner disallowed the Cenvat Credit amounting to a significant sum and imposed penalties on both companies. The appellant argued that the issue of Cenvat Credit eligibility had been settled in their favor by various Tribunal decisions and cited relevant cases to support their claim. The appellant also highlighted a Supreme Court case that upheld the classification of similar structures under the appropriate category.

3. Judicial Precedents and Interpretation: The appellant relied on judicial precedents, including Tribunal decisions and a Supreme Court judgment, to support their stance on the classification and eligibility of Cenvat Credit for the supporting structures. The Tribunal analyzed these precedents and clarified that the structural components used as part of a boiler system should be classified under Heading 8402 of the Tariff. The clarification issued by the Department itself supported the appellant's position, vindicating their classification of parts under the appropriate category.

4. Decision and Rationale: After considering the arguments presented by both parties and reviewing the relevant legal precedents, the Tribunal concluded that the Cenvat Credit would be available to M/s. Monnet Ispat Ltd. for the entire boiler, including the supporting structures. The Tribunal emphasized that various parts and components, even if classified under a different category initially, would be entitled to Cenvat Credit if used for the fabrication of supporting structures that become part of the boiler. Therefore, the impugned order disallowing the Cenvat Credit and imposing penalties was set aside, and the appeals were allowed.

In conclusion, the judgment addressed the classification of goods under the Central Excise Tariff Act, the eligibility of Cenvat Credit for supporting structures, and the imposition of penalties. The decision was based on a thorough analysis of legal precedents and interpretations, ultimately ruling in favor of the appellant regarding the availability of Cenvat Credit for the supplied structures.