2017 (3) TMI 714 - AT - Central Excise

CENVAT credit - aluminum sheet - whether the Cenvat credit in respect of aluminum sheet used for insulating pipes and used for covering galleries is admissible under the Capital goods? - Held that - neither assessee has given any evidence regarding the actual use of the material nor department has physically verified whether material has been used. It is necessary to conclude the admissibility of credit that whether goods on which credit is taken is input or capital goods and it is foremost requirement that the use of the goods is established. Therefore the matter needs to be reconsidered by original adjudicating authority - appeal allowed by way of remand.

Summary

Issues involved:
1. Admissibility of Cenvat credit for aluminum sheet used for insulating pipes and covering galleries.
2. Eligibility for Cenvat credit on various steel materials.

Analysis:

Issue 1: Admissibility of Cenvat credit for aluminum sheet

In Appeal No. E/163/06, the main issue was whether Cenvat credit for aluminum sheet used for insulating pipes and covering galleries is admissible under Capital goods. The Commissioner(Appeals) denied credit for the aluminum sheet used for covering galleries but remanded the matter concerning the aluminum sheet used for insulating pipes to the Original adjudicating authority. The Revenue appealed against the remand decision. The assessee also filed a cross objection for allowing credit for aluminum sheets used for covering galleries. The Tribunal noted that evidence regarding the actual use of the aluminum sheet and steel materials was lacking, necessitating a reevaluation by the original adjudicating authority. The Tribunal directed the assessee to provide supporting documentation to establish the actual use of the materials in their factory. The matter was remanded for a fresh order based on verifying the actual use to determine if the goods are input or capital goods. The appeal related to aluminum sheet used for insulation was upheld, while the Revenue's appeal was dismissed.

Issue 2: Eligibility for Cenvat credit on steel materials

In Appeal No. E/459/06, the issue was whether the assessee is eligible for Cenvat credit on M.S. Plates, black sheet/hot rolled sheets, welding electrodes, M.S. Angles, channels, beams, etc. The Tribunal observed that there was a lack of evidence regarding the actual use of the steel materials, similar to the aluminum sheet issue. It was emphasized that establishing the use of goods is crucial to determine admissibility of credit. The Tribunal remanded this issue to the original adjudicating authority for a fresh decision after considering the lack of evidence presented. All other issues were left open for further consideration. The appeal and cross objection were allowed by way of remand, while the Revenue's appeal was dismissed.

In conclusion, the Tribunal emphasized the importance of establishing the actual use of materials to determine the admissibility of Cenvat credit. The cases were remanded to the original adjudicating authority for a fresh decision based on verifying the actual use of the materials claimed for credit. The Tribunal upheld the appeal related to aluminum sheet used for insulation while dismissing the Revenue's appeal. The issues concerning eligibility for Cenvat credit on steel materials were also remanded for further evaluation.