2018 (9) TMI 1655 - AT - Central Excise

CENVAT Credit - inputs - HR coil, steel plates, MS channel, MS plates etc. for the construction of three storage tanks of 3600 MT each in capacity which are used for storing crude palm oil, palm oil and palmolein oil - Whether the appellants are eligible for credit on the impugned steel items which were used for fabrication of storage tanks used for storing refined palm oil, crude palm oil? Held that - The said issue has been considered in the case of Thiru Arooran Sugars 2017 (7) TMI 524 - MADRAS HIGH COURT , where the Hon ble High Court of Madras has held that the credit on such items used for manufacture of capital goods is eligible - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Eligibility of CENVAT credit on steel items used for fabrication of storage tanks for storing palm oil.

Analysis:
The case involved the appellants availing CENVAT credit on steel items used for constructing storage tanks for storing palm oil. The Department contended that these items did not qualify as inputs, thus challenging the credit availed. The original authority and Commissioner (Appeals) upheld the disallowance of credit, leading to the appeal.

The appellant argued that the storage tanks constituted capital goods under the CENVAT Credit Rules, emphasizing that denial of credit based on the tanks becoming immovable property post-fabrication was incorrect. They cited a case to support their stance. On the other hand, the respondent supported the findings of the impugned order, asserting that post-fabrication, the tanks were non-excisable due to becoming immovable property.

After hearing both sides, the Tribunal deliberated on the issue of credit eligibility for steel items used in fabricating storage tanks for palm oil. Reference was made to a relevant decision by the Hon'ble High Court of Madras, which held that credit for such items used in manufacturing capital goods is permissible. The Tribunal concluded that the disallowance of credit was unwarranted, setting aside the impugned order and allowing the appeal with any consequential relief.

In essence, the judgment centered on the interpretation of CENVAT credit rules concerning the eligibility of credit on steel items used in constructing storage tanks for palm oil storage. The Tribunal's decision was guided by legal precedents and the determination that the disallowance of credit was unjustified based on relevant case law.