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2018 (8) TMI 1671 - AT - Central ExciseCENVAT Credit - MS Bar - Department proceeded to deny the CENVAT Credit by taking the view that the appellant, in the process of manufacture, have not used the goods, MS Bars - Held that - Revenue has proceeded to deny the credit only on the presumption that MS Bars cannot be used in the manufacture of the transformer tanks rather than on the basis of any documentary evidence - the denial of Cenvat Credit on the inputs procured by the appellant and used in the manufacture of the final product, i.e. transformer tank cannot be justified - appeal allowed - decided in favor of appellant.
Issues:
Dispute over availment of Cenvat Credit on "M.S. Bar" goods used in manufacturing Transformer Tank. Analysis: Issue 1: Availment of Cenvat Credit The appellant, engaged in manufacturing Transformer Tank, availed Cenvat Credit under the Cenvat Credit Rules, 2004, during the period from April 2010 to August 2014. The dispute arose when the department denied the Cenvat Credit amounting to ?6,11,898/- on goods described as "M.S. Bar," stating that the appellant did not use these goods in the manufacturing process. Both lower authorities ordered for reversal of Cenvat Credit, interest, and penalties. The appellant contended that the goods procured were indeed used in the manufacture of Transformer Tank, supported by documentation and certificates from a Chartered Engineer and the Director of the appellant. Issue 2: Arguments of the Parties The appellant's counsel argued that the goods procured, described as "MS Bar," were accounted for, issued for manufacture, and used in fabricating clamps welded to the Transformer Tank. He cited Chapter Note 1 (m) of Central Excise Tariff to support the classification of the goods under CETH 7214 as "MS Bar" used in manufacturing Transformer Tank. The counsel also highlighted the historical usage of similar goods by the appellant in manufacturing Transformer Tank since 1984, emphasizing the eligibility of the appellant for the Cenvat Credit. The Departmental Representative (DR) justified the denial of Cenvat Credit, claiming that the "MS Bars" procured were of a type not used in manufacturing Transformer Tank. The DR relied on the lower authorities' conclusion that the appellant did not use MS Bars in the manufacturing process, emphasizing the findings supporting the denial of Cenvat Credit. Issue 3: Judicial Analysis and Decision Upon reviewing the appellant's products and submitted photographs, the Tribunal observed that the procured inputs were indeed used for fabricating clamps welded to the Transformer Tank. The Tribunal noted that the products fit into the classification CETH 7214, as indicated in the invoices accompanying the inputs. It was highlighted that the denial of Cenvat Credit was based on a presumption rather than documentary evidence, and the Director's affidavit supported by the Chartered Engineer's certificate confirmed the usage of the procured inputs in manufacturing Transformer Tank. Conclusion The Tribunal set aside the impugned order, allowing the appeal and granting consequential relief, as the denial of Cenvat Credit on inputs used in manufacturing Transformer Tank was deemed unjustified. The decision emphasized the importance of documentary evidence and proper classification of goods under the Central Excise Tariff in determining the eligibility for Cenvat Credit.
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