2018 (7) TMI 316 - AT - Central Excise

CENVAT Credit - inputs/capital goods - angles, channels, HR coils, plates, etc. - Held that - The judgment of Tribunal in the case of Vandana Global Ltd. 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) had held that the definition of inputs does not include cement, angles - However, this judgment of the Tribunal has been disapproved by the Hon ble Calcutta High Court in the case of Surya Alloy Industries Ltd. v. Union of India 2014 (9) TMI 406 - CALCUTTA HIGH COURT - credit cannot be denied - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Alleged wrongful availment of Cenvat credit on goods not qualifying as 'Capital Goods'
- Denial of credit on certain inputs
- Interpretation of the definition of 'inputs'
- Application of the 'user test' to determine categorization of goods as capital goods

Analysis:

The appeal involved a case where the Appellant, engaged in the manufacture of Steel Rolls for Rolling Mills, challenged an Order-in-Appeal alleging wrongful availment of Cenvat credit on goods not meeting the criteria of 'Capital Goods' and inputs lacking relation to the final product manufacturing process. The adjudicating authority and Commissioner (Appeals) upheld the demand of credit along with penalties. The Appellant contended that the disputed inputs like thermocouples, cables, and various iron and steel items were indeed used in or in relation to the manufacture of the final products, providing evidence to support their claim.

The Tribunal referred to the judgment in the case of Vandana Global Ltd., which excluded certain items from the definition of 'inputs,' but noted that this decision was overruled by the Hon'ble Calcutta High Court in the case of Surya Alloy Industries Ltd., allowing credit on the disputed goods. Additionally, the Tribunal analyzed the usage of iron and steel items in light of the Supreme Court's decision in the case of Rajasthan Spinning & Weaving Mills Ltd., emphasizing the 'user test' from the case of CCE, Coimbatore v. Jawahar Mills to determine the categorization of goods as capital goods.

The Revenue relied on the Supreme Court's decision in the case of Madras Cement Ltd., where the failure to identify the machinery for which input goods were used led to a denial of credit. However, the Tribunal distinguished this case from the present situation. Ultimately, considering the arguments and legal precedents cited, the Tribunal allowed the appeal filed by the Appellant, overturning the lower authorities' decision and granting credit on the disputed goods.

In conclusion, the judgment addressed the issues of wrongful Cenvat credit availment, denial of credit on specific inputs, interpretation of the definition of 'inputs,' and the application of the 'user test' to determine the eligibility of goods as capital goods. The decision provided a detailed analysis of relevant legal principles and precedents, resulting in the allowance of the appeal in favor of the Appellant.