2017 (3) TMI 712 - AT - Central Excise

CENVAT credit - MS items - TMT Bars - Held that - the appellant had used the MS items, except TMT Bars, for the use of repair of plant and machinery. They have used MILL plates/steel plates for replacement and repair of parts of Cement Kiln. Further, the MS items were used in repair of Vertical Raw Mill. These machineries are integral part of the manufacture carried out by the appellant. Even though the said items may not fall under the definition of capital goods, the appellants are eligible for credit on MS items used in the repair of plant and machinery under the category of inputs. CENVAT credit - TMT Bars - Held that - the appellant has used TMT Bars for civil constructions. The same cannot be allowed. Appeal allowed - decided partly in favor of appellant.

Summary

Issues: Disallowance of credit on MS items and TMT Bars.

Analysis:
1. The appellant, engaged in cement manufacturing, availed CENVAT Credit on MS items like plates, angles, and channels, categorized as capital goods. A show cause notice alleged irregular credit availment, leading to a demand for recovery, interest, and penalty.
2. The original authority allowed a partial credit on shafts but confirmed the balance, which the Commissioner (Appeals) upheld, disallowing a significant amount of credit. The appellant appealed to the Tribunal.
3. The appellant argued that MS items were used for plant and machinery repair, not as capital goods, citing relevant case law. TMT Bars were used for civil construction, a claim not pressed by the appellant.
4. The respondent contended that credit on MS items and TMT Bars, treated as capital goods, was ineligible for credit.
5. The Tribunal found that MS items, except TMT Bars, were used for plant and machinery repair integral to manufacturing, qualifying as inputs. Citing precedents, the Tribunal allowed credit on MS items for repair and maintenance but disallowed credit on TMT Bars used for civil construction.
6. The judgment highlighted that inputs for repair and maintenance are crucial for commercial feasibility and referred to case law supporting credit eligibility for items used in plant and machinery repair. The Tribunal partially allowed the appeal by permitting credit on MS items but sustaining the disallowance of credit on TMT Bars used for civil construction.