2018 (4) TMI 827 - AT - Central Excise

CENVAT credit - inputs - MS Angles, Channels, Bars, Plates etc. - Revenue held a view that these items cannot be considered as inputs and were not entitled for credit as these are not used in or in relation to the final products - Held that - these items were used mainly for fabrication of various capital machinery or accessories to such capital machinery and also connected structures which are essential for usage of capital goods - These items were held to be eligible in various decisions of the Tribunal - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Dispute regarding Cenvat credit on MS Angles, Channels, Bars, Plates.
2. Appellant's claim of usage for fabrication of plant and machinery.
3. Allegation of lack of necessary documentary evidence by the appellant.

Analysis:
1. The appeal challenged the denial of Cenvat credit on MS Angles, Channels, Bars, Plates by the Revenue, claiming these items were not used in or in relation to the final products. The lower authorities based their decision on Rule 2(k) of the Cenvat Credit Rules, 2004, excluding these items from credit eligibility.

2. The appellant argued that the disputed items were primarily used for fabricating plant and machinery, such as ladle, billet machine, tundish, and decarburization furnace, along with maintenance work to prevent leakage of liquid metal. The appellant provided detailed explanations and supporting evidence to the Jurisdictional officers, emphasizing the usage of these items in essential production processes.

3. The Revenue contended that the appellant failed to substantiate their usage claims with necessary documentary evidence. However, the Tribunal noted that the appellant had previously received credit for similar items in an earlier period, supported by the Commissioner (Appeals) decision, which relied on the "user test" established by the Hon'ble Supreme Court in previous cases.

4. Upon reviewing the appeal record and the explanations provided by the appellant, the Tribunal found that the disputed MS items were indeed used for fabricating capital machinery and essential structures related to capital goods. Citing various Tribunal decisions and the application of the "user test" principle, the Tribunal concluded that the denial of credit was unfounded.

5. The Tribunal referenced several relevant cases, including Monnet Ispat & Energy Ltd. vs. CCE, Raipur, Srinathji Ispat Ltd. vs. CCE & ST, Ghaziabad, and Sangam India Ltd. vs. CCE & ST, Jaipur - II, to support its decision. Ultimately, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, legal principles applied, and the final decision reached by the Tribunal.