2017 (9) TMI 144 - AT - Central Excise

CENVAT credit - capital goods - SS Plates, MS Billets and Joists etc., used in the factory with various capital goods - Held that - From the use of aforesaid items with the capital goods/ various machineries viz., Rolling Mills, Kiln and Conveyor System, in the factory premises, it cannot be denied that the same are used as accessory/components of the main machines - in view of Clause (iii) of the definition of Capital Goods prescribed at Rule 2(a) of CCR, 2004, these items are eligible to credit - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of Cenvat Credit on SS Plates, MS Billets, and Joists
- Classification of items as capital goods
- Appeal against demand confirmation

Analysis:
1. Availment of Cenvat Credit on SS Plates, MS Billets, and Joists:
The appellant availed Cenvat Credit on SS Plates, MS Billets, and Joists used in the factory with various capital goods. The Revenue proposed a recovery of &8377; 3,74,709/- alleging that these items do not qualify as capital goods under Rule 2(a) of CCR, 2004. The demand was confirmed with interest and penalty, leading to the appeal before the Ld. Commissioner (Appeals).

2. Classification of items as capital goods:
The appellant, engaged in the manufacture of excisable goods falling under CH 72 of the first Schedule to the CETA, 1985, argued that the items in question are essential components of the capital goods/machineries used in the manufacturing process. The Ld. Advocate highlighted the specific roles of SS Plates, MS Billets, and Joists in the functioning of Rolling Mills, Kilns, and Conveyor Systems, respectively. Referring to relevant Circulars and case laws, the appellant contended that these items should be considered as parts and components/accessories of the main machines, making them eligible for Cenvat Credit.

3. Appeal against demand confirmation:
The Ld. AR for the Revenue supported the findings of the Ld. Commissioner (Appeals). However, considering the use of SS Plates, MS Billets, and Joists with the capital goods and various machineries in the factory premises, it was established that these items indeed functioned as accessory/components of the main machines. This interpretation aligned with Clause (iii) of the definition of Capital Goods under Rule 2(a) of CCR, 2004. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief as per law.

In conclusion, the judgment by the Appellate Tribunal CESTAT AHMEDABAD resolved the issues surrounding the availment of Cenvat Credit on specific items, their classification as capital goods, and the appeal against the demand confirmation. The decision emphasized the essential role of SS Plates, MS Billets, and Joists as components of the main machines, ultimately allowing the appeal and providing relief to the appellant in accordance with the law.