2017 (11) TMI 432 - AT - Central Excise

CENVAT credit - MS angles, plates, channels, joists etc. used for fabrication and erection of structures, fabrication of bunkers, fabrication of columns to support two or more MS beams etc - denial on the ground that the appellant has failed to prove the actual usage of the material for fabrication of various components - Held that - in the case of Suguna Metals Pvt. Ltd. 2016 (1) TMI 1167 - CESTAT HYDERABAD , the Tribunal in similar circumstances has allowed the CENVAT credit - further, the Chartered Engineer certificate produced on record has not been properly considered by both the authorities because on the basis of the certificate, substantial benefit has already been given to the assessee and therefore the certificate issued by the Chartered Engineer certifying the usage of the impugned goods for fabrication of various components is established - the appellants are entitled for the CENVAT credit - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against rejection of CENVAT credit on MS angles, plates, channels, joists, etc. used for fabrication; Allegation of irregular credit availed; Commissioner(Appeals) upheld Order-in-Original; Failure to establish usage of materials; Certificate from Chartered Engineer deemed vague; Legal precedent on eligibility of credit; Appeal based on judicial decisions.

Analysis:

The appeal challenged the rejection of CENVAT credit on materials like MS angles, plates, channels, joists, etc., used for fabrication purposes. The appellants, engaged in sponge iron manufacturing, availed credit on these items during a specific period. The lower authority found this credit irregular as these items were not considered inputs or capital goods. The Commissioner(Appeals) rejected the appeal, emphasizing the failure to prove material usage and discrediting the Chartered Engineer's certificate as vague and unspecific.

The appellant argued that the impugned order deviated from the show-cause notice's allegations and binding judicial precedents. They contended that the order went beyond the notice's scope and relied on various decisions supporting their position. Additionally, they asserted that the credit eligibility should be determined before materials become part of immovable property, citing relevant legal cases.

Furthermore, the appellant highlighted settled decisions favoring credit on iron and steel items used for capital goods or structural support. They emphasized the Chartered Engineer's certificate confirming material usage, which was acknowledged in the show-cause notice. The appellant maintained that the rejection of credit based on failure to establish usage was unfounded, given the certificate's content.

In response, the Revenue defended the impugned order, stating the appellant failed to substantiate material usage to both lower authorities. They argued that the Chartered Engineer's certificate lacked specificity and referenced a Supreme Court decision to support their stance.

Upon review, the Tribunal found that the rejection of CENVAT credit was primarily due to the appellant's inability to prove material usage and the Commissioner(Appeals)'s distrust of the Chartered Engineer's certificate. Noting that substantial credit had been allowed based on the certificate, the Tribunal referenced relevant decisions and concluded that the certificate adequately established material usage. Consequently, the Tribunal set aside the impugned order, allowing the appeal with appropriate reliefs.

In conclusion, the Tribunal's decision favored the appellant, emphasizing the importance of properly considering evidence, such as certificates from qualified professionals, to establish the eligibility of CENVAT credit on materials used for fabrication.