2018 (7) TMI 411 - AT - Central Excise

CENVAT Credit - capital goods utilized in the railway factory - Sleepers - Rail Tracks - Held that - An identical issue has come in the assessee s case in M/s. Steel Authority of India vs. CCE & Customs, Raipur 2016 (12) TMI 840 - CESTAT NEW DELHI , where the disputes pertains to cenvat credit available on the Sleepers, railway construction materials like fish plates, elastic rail clips, fish plates, fish bolts, nuts, lighting structures etc. and it was held that The railway track is part and parcel of material handling system integrally connected with the production on movement of dutiable goods and credit is allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of cenvat credit on "Sleepers" and "Rail Tracks" as capital goods utilized in the railway factory.

Analysis:
The appeal was filed against Order-in-Original No.25/Commr./Bol/12 dated 30.05.2012, where the Department had denied cenvat credit on "Sleepers" and "Rail Tracks" used as capital goods in the railway factory. The appellant challenged this denial before the Tribunal.

The Tribunal noted that a similar issue had arisen in M/s. Steel Authority of India vs. CCE & Customs, Raipur [2016(12) TMI 840- CESTAT New Delhi], concerning cenvat credit on railway construction materials like fish plates, elastic rail clips, fish bolts, nuts, lighting structures, etc. The Tribunal in the mentioned case observed that railway tracks used for movement of raw materials and processed materials in the course of manufacturing dutiable final products are integral to the material handling system. Referring to the decision of the Hon'ble Supreme Court in Jayaswal Neco Ltd., the Tribunal held that the denial of credit on railway track materials was unjustifiable. The Tribunal also cited precedents where credit on such materials was allowed, emphasizing the integral role of railway tracks in the manufacturing process.

Based on the Tribunal's earlier decision and the principles established by the Hon'ble Supreme Court, the impugned order denying cenvat credit on "Sleepers" and "Rail Tracks" was set aside, and the appeal was allowed. The Tribunal found the denial of credit unjustified considering the integral role of railway track materials in the manufacturing process.

In conclusion, the Tribunal allowed the appeal, overturning the denial of cenvat credit on "Sleepers" and "Rail Tracks" used as capital goods in the railway factory, based on the established principles and precedents highlighting the essential role of these materials in the manufacturing process.