2017 (6) TMI 205 - AT - Central Excise

CENVAT credit - M.S. Angles, Channels, Structures, Coils, Components and also rebar coil, TNT bar, TMT Cables and M.S. Rebars - denial on the ground that these items do not fit into the definition of capital goods under Rule 2(a) of the CCR - Held that - the impugned order denying the cenvat credit on the impugned goods which were used for laying of the foundation on which the machineries were installed is not sustainable in law in view of the decisions of the Hon ble High Court of Madras in the case of India Cement 2015 (3) TMI 661 - MADRAS HIGH COURT , where credit availed on similar items used for fabrication of structural to support various machineries are allowed - credit allowed - decided in favor of assessee.

Summary

Issues:
- Wrongly availed cenvat credit
- Definition of 'capital goods'
- Applicability of judicial precedents
- Eligibility of credit on items used for laying foundation

Wrongly Availed Cenvat Credit:
The appeal challenged an order by the Commissioner of Central Excise disallowing a cenvat credit of Rupees 2,44,075 along with penalties under Rule 15(1) and Rule 15(2) of the Central Excise Act. The appellant, engaged in paper manufacturing, had availed credit on various items like M.S. Angles, Channels, Structures, Coils, Components, and others. A show-cause notice was issued, leading to the disallowance of credit on certain items, which was confirmed by the Commissioner.

Definition of 'Capital Goods' and Judicial Precedents:
The appellant argued that the impugned order misinterpreted the definition of 'capital goods' and disregarded binding judicial precedents. The Commissioner allowed credit on certain components but disallowed it on items like rebar coil, TNT bar, TMT cables, and M.S. Rebars used for constructing machinery foundations. The appellant contended that these items were integral for machinery installation, citing decisions supporting the inclusion of such items as 'capital goods.'

Eligibility of Credit on Items Used for Laying Foundation:
The appellant relied on decisions by the Hon'ble High Court of Madras and CESTAT, Chennai, which allowed credit on similar items used for structural fabrication supporting machinery. The appellant argued that even under the definition of 'inputs,' the credit for foundation-related goods was eligible for the period in question. The Tribunal, considering the submissions, found the denial of cenvat credit on foundation-related items unsustainable in law. Referring to past decisions, including Ispat Industries Ltd. Vs. Commissioner, the Tribunal held that items linked to machinery for production qualify as 'capital goods,' overturning the Commissioner's decision and allowing the appeal.

In conclusion, the Tribunal set aside the impugned order, granting relief to the appellant based on the applicability of judicial precedents and the definition of 'capital goods' in the context of the items used for laying machinery foundations.