2017 (12) TMI 1149 - AT - Central Excise

CENVAT credit - whether the appellant is entitled for the cenvat credit on angles, channels, beams, nut-bolts, guides etc. used by them for fabrication of vertical storage structure, racks for storage of raw material and finished goods? - Held that - This rack is used for storage of raw material and finished goods. The storage of goods in a manufacturing unit is very vital part for manufacture. Without storage system, material management is impossible and consequently it will adversely affect the entire manufacturing chain in the factory - since the steel items viz, angles, channels, beams etc used for making storage rack are used in or in relation to manufacture of final product, hence clearly eligible for cenvat credit. The material used for storage system is eligible for cenvat credit - appeal allowed - decided in favor of appellant.

Summary

Issues involved: Whether the appellant is entitled to cenvat credit on steel items used for the manufacture of storage racks for raw material and finished goods.

Analysis:

1. Appellant's Submission: The appellant argued that the storage racks made from steel items are crucial for the manufacturing process as they are directly used in or in relation to the manufacture of final products. The counsel cited various judgments supporting their claim, such as Banco Products (India) Ltd, Sonai Engineering Pvt Ltd, Kosi Plast P Ltd, Lear Automotive India Ltd, and Welpsun India Ltd.

2. Revenue's Argument: The Assistant Commissioner representing the revenue reiterated the findings of the impugned order, opposing the appellant's claim for cenvat credit on the steel items used for manufacturing storage racks.

3. Tribunal's Decision: After considering both sides' submissions and perusing the records, the tribunal concluded that the steel items used for making storage racks are directly related to the manufacture of final products. The tribunal referred to previous judgments, like Banco Products (India) Ltd, which emphasized the importance of proper storage for efficient manufacturing processes. The tribunal also highlighted the role of storage in the manufacturing chain and the necessity of steel items for storage racks in the manufacturing process.

4. Precedents: The tribunal referenced several cases where the issue of cenvat credit on storage systems was discussed and allowed, emphasizing the integral role of storage systems in the manufacturing process. The judgments of Banco Products (India) Ltd, Sonai Engineering Pvt Ltd, Kosi Plast P Ltd, Lear Automotive India Ltd, and Welpsun India Ltd were cited to support the decision to grant cenvat credit on steel items used for storage racks.

5. Final Ruling: The tribunal held that the appellant is entitled to cenvat credit on the steel items used for manufacturing storage racks for raw material and finished goods. The tribunal relied on consistent views from previous judgments and allowed the appeal, modifying the impugned order to grant cenvat credit. The decision was pronounced in court on 27/11/2017.