2017 (5) TMI 666 - AT - Central Excise

CENVAT credit - MS Items - capital goods - Held that - appellant produced evidence of having used the MS items for fabrication of support structure for reactors/heat exchangers, walk way to reactors, jackets for reactors and cable tray pipeline supports - the period involved is prior to 07.07.2009, hence credit remains allowed - the disallowance of credit is unjustified - decided in favor of appellant.

Summary

Issues: Disallowance of credit on MS items under the category of capital goods.

Analysis:
1. The appeal was filed against the Commissioner (Appeals) order upholding the disallowance of credit on MS items used by the appellants in the manufacture of bulk drugs and intermediaries.
2. The appellants availed irregular credit on MS Channels, Beams, Plates, Angles, etc., during 2007-08 and 2008-09. A show cause notice proposed recovery of CENVAT Credit amounting to ?14,13,992/- along with interest and equal penalty.
3. The Ld. Counsel for the appellant argued that MS items were used for specific purposes like supporting structures, platforms, jackets for reactors, and cable tray pipeline supports. A Chartered Engineer's Certificate was provided to establish the usage of MS items for fabrication of capital goods and machinery.
4. The Ld. AR contended that proper documents were not furnished to prove the use of MS items for capital goods and that MS items do not qualify as capital goods or inputs.
5. The Member (Judicial) analyzed the submissions and evidence presented. The appellant explained in detail how MS items were utilized for various fabrication purposes. They provided photographs and a Chartered Engineer's Certificate. The period involved was before 07.07.2009.
6. Referring to relevant case laws, the Member held that disallowance of credit on MS items used for fabrication of capital goods prior to 07.07.2009 was unjustified. The impugned order was set aside, and the appeal was allowed with consequential reliefs.

This judgment highlights the importance of providing detailed evidence to support credit claims and the significance of relevant case laws in determining the eligibility of credit on specific items used in manufacturing processes.