2018 (2) TMI 1608 - AT - Central Excise

CENVAT credit - steel items - welding electrodes - whether the assessee is entitled to steel items used in manufacturing of structures items which are embedded to earth? - Held that - in the case of Kisan Sahkari Chini Mills Ltd. v. CCE, Meerut-II 2017 (1) TMI 1479 - CESTAT ALLAHABAD , this Tribunal has allowed CENVAT credit on the steel items and welding electrodes used in the factory of production for manufacture of excisable goods as inputs as defined in section 2(g) of CCR 2002 - credit allowed. Welding electrodes - Held that - the welding electrodes has been used for repairs and maintenance of plant and machinery which has been ultimately used for manufacturing of final product - credit allowed. Extended period of limitation - Held that - there were contrary decisions during that impugned period for availment of Cenvat credit on items in question - extended period not invokable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of Cenvat Credit on steel items used for repairs of old structures embedded to earth
- Entitlement of Cenvat Credit on steel items used in manufacturing structures embedded to earth
- Entitlement of Cenvat Credit on welding electrodes used for repairs and maintenance of plant and machinery

Analysis:
1. The appellant appealed against the denial of Cenvat Credit on steel items used for repairs of old structures embedded to earth. The Tribunal had previously ruled in favor of the appellant in an earlier round of litigation, but the decision was challenged by the Revenue before the High Court. The High Court remanded the matter back to the Tribunal for a detailed finding on the issue of limitation, leading to the current appeal.

2. The main issue was whether the appellant was entitled to avail Cenvat Credit on steel items used in manufacturing structures embedded to earth. The Tribunal referred to previous cases, such as the Govind Nagar Sugar Ltd. case and the Kisan Sahkari Chini Mills Ltd. case, where Cenvat credit was allowed on similar items used in manufacturing processes. Relying on these precedents, the Tribunal held that the appellant was entitled to avail Cenvat Credit on the steel items in question necessary for the installation of plant and machinery.

3. Additionally, the Tribunal considered the entitlement of Cenvat Credit on welding electrodes used for repairs and maintenance of plant and machinery. It was determined that since the welding electrodes were ultimately used in the manufacturing of the final product, the appellant was also entitled to avail Cenvat Credit on them.

4. The issue of availment of Cenvat Credit during the impugned period was in dispute due to conflicting decisions. As there were contrary decisions during that period regarding the availment of Cenvat Credit on the items in question, the extended period of limitation was deemed not invokable. The Tribunal found that the demands raised by invoking the extended period of limitation were not sustainable, leading to the decision to set aside the impugned order and allow the appeal with any consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, allowing the Cenvat Credit on steel items used for manufacturing structures embedded to earth and on welding electrodes used for repairs and maintenance of plant and machinery. The decision was based on previous precedents and the lack of sustainability of the demands raised during the extended period of limitation.