2017 (3) TMI 1079 - AT - Central Excise

CENVAT credit - MS Plates - MS sheets - Welding Rods - Steel wire - Wire mesh - MS strapping - Held that - the appellant having established the fact of use of disputed items in the factory, the disallowance of credit is unjustified - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Disallowance of credit on MS Plates, MS sheets, Welding Rods, Steel wire, Wire mesh, and MS strapping.

Analysis:
1. The appeal was filed against the Commissioner (Appeals) order disallowing credit on various items like MS angles, bars, sheets, tubes, welding rods, etc., amounting to ?52,99,500 for the period from 10/2010 to 8/2015.
2. The Commissioner disallowed credit of ?26,17,748, confirmed the demand with interest, and imposed a penalty of ?15,60,880.
3. The appellant, engaged in bulk drug manufacturing, used MS items for fabricating solvent storage tanks, supported by a Chartered Engineer's certificate. The appellant argued that the items disallowed, including welding rods, wire mesh, steel wire, and MS strapping, were essential for their manufacturing process.
4. The appellant's counsel argued for the eligibility of credit under the amended definition of inputs effective from 01.04.2011.
5. The Assistant Commissioner reiterated the findings of the impugned order, stating that the appellant failed to maintain records for the fabrication of capital goods like storage tanks.
6. The definition of inputs as of 01.04.2011 was discussed, emphasizing that all goods used in the factory by the manufacturer are eligible for credit. The appellant provided evidence of using the disputed items in the manufacturing process, including Chartered Engineer certificates and work sheets.
7. The Tribunal found the disallowance of credit unjustified as the appellant proved the use of the disputed items in the factory. The impugned order disallowing credit was set aside, and the appeal was allowed with consequential reliefs.

This detailed analysis highlights the arguments presented by both parties, the legal provisions governing the issue, and the Tribunal's decision based on the evidence and definitions provided.