2019 (3) TMI 239 - AT - Central Excise

CENVAT Credit - capital goods - S.S. Corrugated Flexible House Pipes, Stoplik style, PTFE Gasket, Plastic Mould Articles, M.S. Reactor Kemrok Perforated Trays, G.I. Bolts, and Nuts/Zubc/washers, Ball Zinc Plated (Nut), G.I. Nut Ball, Plain washers-zinc plated, etc. - Held that - Since, the department stand was that it is not falling under respective chapter heading specified under the capital goods, therefore, it is not capital goods but even if it does not fall under the respective chapter heading of capital goods but if the goods qualifies as an accessories then the Cenvat Credit is admissible irrespective it falls any chapter heading. However, the factual aspect of use of these items according to which it can be decided that whether these goods are accessories or otherwise has not been carried out, therefore, matter need to be remanded to the adjudicating authority only for limited aspect that whether all these goods were used as an accessory for erection of structure of plant and machinery. Appeal allowed by way of remand.

Summary

Issues: Whether the appellant is entitled to Cenvat Credit on various materials used as accessories for plant and machinery.

Analysis:
The appellant claimed Cenvat Credit on materials like S.S. Corrugated Flexible House Pipes, PTFE Gasket, M.S. Reactor Kemrok Perforated Trays, G.I. Bolts, and Nuts/Zubc/washers, among others, arguing that these items were used as accessories for the erection or support structure for plant and machinery, falling under the definition of capital goods as per Rule 2(A) of Cenvat Credit Rules, 2004. The appellant's counsel cited various judgments to support their claim, emphasizing the classification of these items as accessories. On the other hand, the Revenue, represented by the Assistant Commissioner, relied on the impugned order and a specific judgment to counter the appellant's claim.

Upon careful consideration of the arguments presented by both sides and a review of the records, the Tribunal found that the Revenue had proposed denying credit on the basis that the goods were not covered under capital goods but were inputs excluded under the definition of inputs. However, the Tribunal accepted the appellant's argument that these items qualified as accessories of capital goods, making them eligible for Cenvat Credit. The Tribunal noted that while the department's stance was that the goods did not fall under the specified chapter heading for capital goods, if the items qualified as accessories, the credit would be admissible regardless of the chapter heading. The Tribunal highlighted the need for a factual assessment of whether these goods were indeed used as accessories for the erection of plant and machinery.

Consequently, the impugned order was set aside, and the appeals were allowed by way of remand to the adjudicating authority. The matter was remanded for a limited purpose - to determine whether the materials in question were used as accessories for the structure of plant and machinery. If established, these items would qualify as accessories of capital goods and fall within the definition of capital goods, making them eligible for Cenvat Credit.