2017 (5) TMI 505 - AT - Central Excise

CENVAT credit - silo hoses and corrugated hoses - Held that - silo hoses are used for connecting the silo with other machineries in the factory. Therefore they being similar to corrugated hoses and used for connecting the machinery, the credit is eligible - reliance placed in the appellant s own case 2016 (7) TMI 1198 - CESTAT HYDERABAD , where it was held that These goods are integral to the manufacturing process and would fall within the definition of capital goods/parts, and the credit was allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Disallowance of credit on silo hoses and corrugated hoses under CENVAT scheme.

Analysis:
The appeal was filed against the order disallowing credit on silo hoses and corrugated hoses by the Commissioner(Appeals). The appellants, engaged in manufacturing Silicon Carbide, availed CENVAT credit on inputs and capital goods. The Department alleged irregular availing of credit, specifically on corrugated hoses and silo hoses, leading to a disallowance of credit amounting to &8377;31,919. The Tribunal had previously allowed credit on corrugated hoses under the category of capital goods in a similar case. The appellant argued that silo hoses, similar to corrugated hoses, are essential for manufacturing Silicon Carbide grains, connecting machinery, and should be treated as parts of capital goods. The Department contended that hoses did not fall within the definition of capital goods. After hearing both sides, the Tribunal found that silo hoses are necessary for connecting machinery in the factory, similar to corrugated hoses, and hence eligible for credit. The impugned order disallowing credit was set aside, and the appeal was allowed with consequential reliefs.

This judgment primarily dealt with the eligibility of CENVAT credit on silo hoses and corrugated hoses. The key issue revolved around whether these hoses could be considered as parts of capital goods and thus eligible for credit. The appellant argued that both types of hoses were crucial for the manufacturing process of Silicon Carbide grains and should be treated as accessories of capital goods. The Tribunal, referencing a previous order, acknowledged the importance of hoses in connecting machinery and deemed them essential components of capital goods. The Department, however, maintained that hoses did not meet the criteria for capital goods. Ultimately, the Tribunal sided with the appellant, emphasizing the functional significance of silo hoses in connecting machinery within the factory, similar to corrugated hoses. Consequently, the Tribunal allowed the appeal, overturning the disallowance of credit and granting any consequential reliefs.

In conclusion, the judgment provided clarity on the eligibility of CENVAT credit for silo hoses and corrugated hoses. By analyzing the functional role of these hoses in connecting machinery within the factory, the Tribunal determined that they qualified as essential components of capital goods. This decision overturned the disallowance of credit by the lower authorities and granted the appellant the right to claim the credit, ensuring a fair application of the CENVAT scheme in the manufacturing process of Silicon Carbide grains.