2017 (4) TMI 206 - AT - Central Excise

CENVAT credit - CTD bars, beams, M.S. angles, plates, sheets, etc - denial on the ground that they are neither inputs nor capital goods so as to become eligible for credit - Held that - The lower authorities categorically recorded that various items like Kiln cooler, material handling/conveyor system are all specifically classifiable as machinery falling under Chapter Heading 84, the various items on which credit has been availed are directly used for fabrication or manufacture of various capital goods. The nature of such usage and emergence of various final product have been explained by the lower authorities in detail - the allegation in show cause notice is very vague and without any support - appeal dismissed - decided against Revenue.

Summary

Issues:
- Disallowance of Cenvat credit on certain items used in the manufacture of sponge iron.
- Eligibility of items like CTD bars, beams, M.S. angles, plates, sheets, etc., for Cenvat credit.
- Classification of fabricated machinery and structures as excisable or non-excisable based on attachment to earth.
- Appeal against the order of Commissioner (Appeals) upholding the original authority's decision to drop the demand.

Analysis:
The case involved the disallowance of Cenvat credit availed on items like CTD bars, beams, M.S. angles, plates, sheets, etc., used in the manufacture of sponge iron. The Revenue contended that these items, upon fabrication, become immovable property and lose their identity, making them ineligible for credit under the Cenvat Credit Rules, 2004. The original authority and the Commissioner (Appeals) had both ruled in favor of the respondent, holding that the items were directly used for fabrication of capital goods like Kiln cooler, material handling/conveyor system, falling under Chapter Heading 84. The lower authorities extensively examined the issue, citing relevant case laws and explaining the nature of usage and emergence of final products. The show cause notice was deemed vague and lacking support. The Tribunal found no merit in the Revenue's appeal and dismissed it, upholding the concurrent findings of the lower authorities.

In essence, the key contention revolved around whether the fabricated machinery and structures, such as ground hopper, coal feeder, tasser grating, etc., were to be classified as excisable goods based on their attachment to the earth. The Revenue argued that since these items became immovable property upon fabrication, they were not subject to Excise duty and hence not eligible for Cenvat credit. However, the Tribunal noted that there was no concrete evidence to support the creation of immovable property by the respondent. The lower authorities had thoroughly analyzed the issue, highlighting the specific usage of the items in the manufacture of capital goods and machinery, which were classifiable under Chapter Heading 84. The Tribunal concurred with the lower authorities' findings and dismissed the Revenue's appeal, emphasizing the lack of merit to interfere with the concurrent decisions.

Overall, the judgment underscored the importance of a detailed examination of the facts, the nature of usage of items, and the classification of goods under relevant headings to determine eligibility for Cenvat credit. The Tribunal upheld the decisions of the lower authorities, emphasizing the need for concrete evidence and legal support in challenging such matters.