2017 (12) TMI 313 - AT - Central Excise

CENVAT credit - welding electrodes - SS Coil - MS Angles - MS Channels - Joists - Held that - reliance placed in the case of Singhal Enterprises Private Ltd. v/s Commissioner Customs & Central Excise 2016 (9) TMI 682 - CESTAT NEW DELHI where it was held that applying the User Test to the facts in hand we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of Capital Goods as contemplated under Rule 2(a) of the Cenvat Credit Rules hence will be entitled to the Cenvat Credit - credit allowed on welding electrodes. CENVAT credit - SS coil - Held that - this has been used in Juice Sulphiter and raw juice through lining in the factory of production. As they do not qualify under definition of capital goods the same are covered under the definition of input and credit taken accordingly - there is no dispute that these items have been used in the factory of production for manufacture of taxable/dutiable goods - credit allowed. CENVAT credit - MS Angles - MS Channels - Held that - MS Angles are used in enhancing the capacity and modification of dryer house equipment namely sugar beater hopper etc. These angles have also been used for staging and supporting structures of equipments but not used as civil work. Accordingly these angles etc. qualify as capital goods for Cenvat Credit - Further MS channel have been used in expansion and modification of dryer house equipments namely sugar beater and hopper etc. to give support and strengthening the same. Admittedly these goods have not been used as civil construction item. Thus these angles and channels quality as for Cenvat Credit as inputs - credit on both items allowed. CENVAT credit - Joist - Held that - Joist have been used in staging of Juice Sulphiter Juice weighing scale and sugar beater. Joist have been used as supporting structure of equipment in the factory of production but not used in civil work admittedly - joist also qualifies for Cenvat Credit. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Allowability of Cenvat credit on welding electrodes, SS Coil, MS Angles, MS Channels, and Joists.

Analysis:
1. The appeal involved a dispute over the allowability of Cenvat credit on various items used by a sugar mill. The appellant had taken Cenvat Credit during a specific period, and a show cause notice was issued regarding the credit on items like welding electrodes, SS Coil, MS Angles, MS Channels, and Joists. The Order-in-Adjudication partially disallowed the credit, leading to an appeal before the learned Commissioner (Appeals), who upheld the decision, including the penalty imposed under Rule 13 of CCR, 2002.

2. The first issue addressed was the allowability of Cenvat credit on welding electrodes. The appellant argued that these electrodes were essential for production, installation of new machinery, and repair of existing machinery. Citing relevant precedents, the Tribunal held that the credit on welding electrodes was allowable based on practical production necessities and legal rulings supporting such credit.

3. Moving on to SS Coil, it was explained that these were used in specific processes within the factory and qualified as inputs. Similarly, MS Angles and MS Channels were utilized for enhancing capacity and modifying equipment without being used for civil construction. The Tribunal found these items eligible for Cenvat Credit as they contributed to the production process and were supported by legal precedents.

4. The last item in question was Joists, which were used as supporting structures in the factory but not for civil work. Relying on relevant judgments, the Tribunal concluded that Joists also qualified for Cenvat Credit as they were essential for the functioning of equipment. The decision was supported by rulings emphasizing the importance of such structural components for machinery erection and functionality.

5. In conclusion, the Tribunal allowed the appeal, setting aside the disallowed Cenvat Credit and the imposed penalty. The appellant was granted consequential benefits in accordance with the law, highlighting the importance of legal compliance and precedents in determining the allowability of Cenvat credit on various items used in the manufacturing process.