2018 (10) TMI 622 - AT - Central Excise

CENVAT Credit - input - HR Plates - Laboratory Furniture - whether the appellant is entitled for the Cenvat Credit in respect of HR Plates which were used for Fabrication of Storage Tank used for factory of the appellant and Laboratory Furniture? - Held that - Goods used in the factory by the manufacturer of the final product are inputs. As per this sub-clause A of definition of Inputs, it is not required that the goods should be used in the final goods if it is used by the assessee in his factory whether the final product is not contained in the goods, it will quantify as input. There is no dispute that the HR Plates were used in the factory of the appellant who is the manufactured, plates were used for Fabrication of Storage Tank which is subsequently used for production of final product, therefore, it is not only used in the factory also used in the relation to manufacture of final product. Therefore, HR Plates clearly qualified as inputs in terms of Rule 2 (k) of cenvat Credit Rules, 2004 - credit allowed. Laboratory Furniture - Held that - Appellant are not contesting the demand of Cenvat Credit on the Laboratory Furniture and the same has been reversed by them - demand upheld. Demand of Interest - Held that - Since the appellant maintained the credit balance throughout the period the interest is not chargeable, in terms of Rule 14, wherein, it is provided that interest is chargeable only when assessee availed and utilized the Cenvat credit, therefore, only by availing the Cenvat Credit and not utilized the same, interest cannot be charged. Appeal allowed in part.

Summary

Issues:
Whether the appellant is entitled to Cenvat Credit for HR Plates used in the fabrication of storage tanks and laboratory furniture.

Analysis:
The appellant claimed Cenvat Credit for HR Plates used in the fabrication of storage tanks and laboratory furniture. The appellant's counsel argued that the HR Plates were used in the fabrication of storage tanks, which were further used in the manufacturing process within the factory. A Chartered Engineer Certificate was submitted to support this claim. Reference was made to a previous tribunal judgment to strengthen the argument. The appellant agreed to reverse the credit for laboratory furniture, conceding the issue. The counsel also contended that since the Cenvat Credit balance exceeded the reversed credit and was not utilized, interest should not be charged on the balance.

The Revenue's representative reiterated the findings of the impugned order, supporting the denial of credit for HR Plates. The Lower Authority had denied the credit on the grounds that HR Plates did not fall under the category of input. The definition of "inputs" was crucial in determining the eligibility for Cenvat Credit. The definition included goods used in the factory by the manufacturer of the final product. It was clarified that goods need not be directly used in the final product; if used in the factory related to the manufacture of the final product, they qualified as inputs. Therefore, HR Plates used in the fabrication of storage tanks were deemed eligible for Cenvat Credit under Rule 2(k) of the Cenvat Credit Rules, 2004.

Regarding laboratory furniture, the appellant accepted the demand for Cenvat Credit reversal, which was upheld. The argument against charging interest on the Cenvat Credit balance was supported by Rule 14, which stipulated that interest is chargeable only when the credit is availed and utilized. Since the credit balance was maintained but not utilized, interest was deemed inapplicable. Consequently, the demand for interest and penalty corresponding to the Cenvat Credit for laboratory furniture was set aside. The appeal was partly allowed based on the above considerations.