2018 (6) TMI 1335 - AT - Central Excise

CENVAT credit - input - Unchained Cold Rolled P.T. Aluminum Coil - Aluminum Trefoil Clamp - whether the appellant, manufacturer of cement is entitled to Cenvat credit on the items in dispute being Unchained Cold Rolled P.T. Aluminum Coil and Aluminum Trefoil Clamp? - Held that - Both the items in question have been undisputedly used in the factory of production - It is not the case of revenue that the appellant could manufacture the dutiable output without the use of the items in question. Credit on both the items in question, are allowable, as inputs under Rule 2 (k) of CCR, 2004 being used in the factory of production - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the manufacturer of cement is entitled to Cenvat credit on Unchained Cold Rolled P.T. Aluminum Coil and Aluminum Trefoil Clamp.

Analysis:
The appellant, a cement manufacturer, sought Cenvat credit on the disputed items, explaining their essential use in cable dressing and insulation for the production process. An audit objection was raised initially, questioning the eligibility of Cenvat credit on various items, including the ones in question. The appellant clarified that the Aluminum Trefoil Clamp is crucial for cable dressing in the powerhouse, becoming an integral part of the cable, and the Unchained Cold Rolled P.T. Aluminum Coil is used for insulation to maintain temperature for cement production.

A subsequent show cause notice proposed disallowing Cenvat credit on the items, leading to an Order-in-Original dropping the demand for most items except the Aluminum Trefoil Clamp and Unchained Cold Rolled P.T. Aluminum Coil. The Order-in-Appeal denied credit on the clamp, stating they are not components or spares under Cenvat Credit Rules, and on the coil, mentioning it as part of the steam pipeline, thus not eligible for credit. The appellant contended that both items were essential for production, meeting the definition of inputs under CCR, 2004.

In the appeal, the appellant's counsel argued that the usage of the items in the production process was undisputed and necessary, emphasizing the eligibility of Cenvat credit as per Rule 2(k) of CCR, 2004. The Revenue's representative supported the impugned order disallowing the credit. The Tribunal, after considering the arguments, found that both items were undeniably used in the production process and crucial for manufacturing the dutiable output. Therefore, the Tribunal allowed the appeal, setting aside the order disallowing Cenvat credit on the items, emphasizing the availability of credit on inputs used in the production of dutiable goods and granting consequential benefits to the appellant.