2017 (5) TMI 877 - AT - Central Excise

MODVAT/CENVAT credit - Plates, Channels, Shapes & Section, Sheets, Angles, Bar, Iron & Steels, etc. falling under Chapter Heading 72 of Schedule to CETA, 1985 - eligible inputs or not? - Held that - the ruling by Hon ble High Court of Rajasthan in the case of Union of India Versus Hindustan Zinc Ltd. 2006 (5) TMI 44 - HIGH COURT RAJASTHAN is squarely applicable in the present case, where it was held that MS/SS Plates used in workshop meant for repair and maintenance of machinery which are used for manufacture of final product are eligible to avail Modvat credit - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Eligibility of Cenvat credit on certain goods used in manufacturing process

Analysis:
The appellant, M/s Rauzagaon Chini Mills, availed Cenvat credit on certain goods falling under Chapter Heading 72 of Schedule to Central Excise Tariff Act, 1985, treating them as inputs. The Revenue contended that these goods were not eligible for Cenvat credit, leading to a Show Cause Notice proposing to recover the credit amount. The appellant argued that the inputs were used in manufacturing various machinery in the Sugar Manufacturing Plant, citing Explanation 2 to Rule 2(k) of Cenvat Credit Rules, 2004, which defines eligible inputs for Cenvat credit. The Original Authority upheld the demand and penalty, prompting the appellant to appeal before the Commissioner (Appeals), who dismissed the appeal. Subsequently, the appellant approached the Tribunal seeking relief.

The appellant's counsel referred to a ruling by the Hon'ble High Court of Rajasthan in a similar case involving MS/SS Plates used in workshop maintenance for machinery manufacturing final products, which allowed Modvat credit. The Tribunal considered this precedent and concluded that the ruling was applicable in the present case. The Tribunal highlighted the importance of goods used for up-keep and maintenance of plant and machinery directly involved in manufacturing excisable articles, deeming them as capital goods eligible for Modvat credit. Based on this reasoning, the Tribunal allowed the appeal, granting the appellant entitlement to consequential relief as per law.

In summary, the Tribunal's judgment revolved around the eligibility of Cenvat credit on goods used in the manufacturing process, drawing parallels from a previous ruling by the Hon'ble High Court of Rajasthan. By recognizing the essential role of certain goods in maintaining and operating machinery crucial for the manufacturing process, the Tribunal upheld the appellant's claim for Cenvat credit, overturning the decisions of the lower authorities and providing relief to the appellant in line with legal provisions and precedents.