2017 (5) TMI 751 - AT - Central Excise

Benefit of N/N. 67/95-CE dated 16.3.95 - denial of benefit on the ground that MS channels, MS angles, joist etc. were not covered under the definition of capital goods as defined under CCR, 2004? - whether or not the appellant is entitled to exemption from excise duty in respect of MS angles, MS channels, joist etc. manufactured by him and captively consumed in the factory of production? - Held that - the coal elevator, chamber separator and coal gasifier are essential component of the production unit of the appellant - the goods have been used in relation to the manufacture of final product of the assessee - identical issue decided in the case of S.K.S. Ispat & Power Limited Versus C.C.E., Raipur 2016 (10) TMI 479 - CESTAT NEW DELHI , where it was held that From the language of the Notification, prima facie, it appears that the appellant is entitled to the benefit of Notification No.67/95-CE as the iron and steel items like angles, channels, beams etc. have been claimed to be captively consumed in the fabrication of structure of capital goods, and matter remanded for fresh decision - matter is remanded to the original adjudicating authority who will decide the issue de novo after examining all the records of evidence of use and consumption of subject items - appeal allowed by way of remand.

Summary

Issues:
- Interpretation of Notification No. 67/95-CE for exemption from excise duty on captively consumed goods used in the factory of production.
- Determination of whether MS angles, MS channels, joist qualify as capital goods or inputs under Cenvat Credit Rules, 2004.
- Assessment of whether the goods were used in or in relation to the manufacture of the final product.

Analysis:
1. Interpretation of Notification No. 67/95-CE:
The appellant claimed exemption under Notification No. 67/95-CE for captively consumed goods used in their factory for production without payment of excise duty. The notification exempts capital goods and specified inputs used within the factory of production. The contention was whether MS angles, channels, joist fell within the ambit of this notification.

2. Qualification of Goods under Cenvat Credit Rules:
The Department argued that the goods did not qualify as capital goods or inputs under Cenvat Credit Rules, 2004. The central issue was whether the goods were essential components used in or in relation to the manufacture of the final product. The Department relied on a Supreme Court judgment to support their position.

3. Use of Goods in Relation to Final Product:
The Tribunal analyzed the use of MS angles, channels, joist in the production process. The appellant argued that these goods were produced within the factory and used captively for the support structure of the main production plant. The Tribunal noted that the goods were integral components of the production unit and were used in relation to the manufacture of the final product.

4. Precedent and Remand Order:
The Tribunal distinguished a Supreme Court judgment cited by the respondent, emphasizing that the issue raised in that case was different. Additionally, the Tribunal referred to a previous case where a similar issue was remanded for fresh adjudication. Following this precedent, the Tribunal set aside the impugned order and remanded the matter to the original authority for further examination and decision.

In conclusion, the Tribunal allowed the appeal by way of remand, directing the original adjudicating authority to reevaluate the issue in light of the Notification No. 67/95-CE and the specific use of the goods in the production process. The judgment highlighted the importance of considering the essentiality of the goods in the manufacturing process and their relation to the final product for determining eligibility for exemption from excise duty.