2017 (4) TMI 143 - AT - Central Excise

CENVAT credit - manufacturer of V.P. sugar and molasses - whether the appellant are entitled to Cenvat credit on various items like Plates Shape & Section MS Angles GP Sheet HR Coil CR step MS Channels Paints Welding Electrodes etc. procured and used by the appellant as inputs or in manufacture of capital goods which have been further used in their factory of production for manufacture of Excisable goods? Held that - the appellant had lead evidence before the Courts that the items in question like Welding Electrodes MS electrodes MS plate Shape and Section etc have been utilised for fabrication of mostly Capital Goods. The appellant had filed Annexure-A to the reply to show cause wherein they have explained item wise usage whether the same has been used in fabrication of boiler and Millhouse or boiler or any other machinery or its part in the factory of production. The said explanation usage duly filed by under certificate of the head of technical department of the appellant has not been found to be untrue by the courts below - further the definition of inputs in Rule-2 (k) read with Explanation-2 provides input includes goods used in the manufacture of capital goods which are further used in the factory of the manufacturer. Thus in view of the specific provision for allowing Cenvat credit on inputs either used as inputs directly or indirectly in the manufacture of final products or used in the factory of production for manufacture of further capital goods which are further used in the factory of manufacturer the Cenvat credit is allowable - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Entitlement to Cenvat credit on various items like Plates, Shape & Section, MS Angles, GP Sheet, HR Coil, CR step, MS Channels, Paints, Welding Electrodes procured and used by the appellant as inputs or in manufacture of capital goods.

Analysis:
The appellant filed two appeals against a common Order-in-Appeal passed by the Commissioner of Central Excise & Customs. The primary issue revolved around the entitlement of the appellant, a manufacturer of V.P. sugar and molasses, to Cenvat credit on multiple items used in their factory for manufacturing excisable goods. The revenue objected to the Cenvat credit claimed by the appellant on various items, alleging that they did not qualify as inputs or capital goods under the Cenvat Credit Rules, 2004. The revenue contended that certain items like Primer, Paint, Thinner, and welding electrodes did not fall under the definition of inputs. The appellant's appeal was rejected by the Commissioner (Appeals) on the grounds that the goods in question did not meet the criteria for capital goods as per the Cenvat Credit Rules. The appellant challenged this decision before the Tribunal.

The appellant argued that there was no concealment or suppression regarding the Cenvat credit claimed, as it was disclosed in the returns and documents submitted to the revenue. The appellant cited a previous case where a similar issue was decided in their favor, emphasizing that certain materials used in the manufacturing process should be eligible for Cenvat credit. The appellant also highlighted a ruling stating that items like MS/SS plates used for repair and maintenance of machinery, which are further used in manufacturing excisable goods, are eligible for Cenvat credit. The appellant contended that the Cenvat credit should be allowed based on the evidence provided and the specific provisions of the Cenvat Credit Rules.

After considering the arguments presented by both parties, the Tribunal found that the appellant had provided evidence demonstrating the usage of the items in question for the fabrication of capital goods. The Tribunal noted that the definition of inputs includes goods used in the manufacture of capital goods further used in the factory of the manufacturer. Therefore, the Tribunal held that the appellant was entitled to Cenvat credit on the items in question. Consequently, the Tribunal allowed the appeals, set aside the impugned order, and granted the appellants consequential benefits in accordance with the law.