2019 (3) TMI 1368 - AT - Central Excise

CENVAT Credit - capital goods - MS Angles, MS Plates, MS Channels, MS Joist, HR Plates etc. - period Apr. 09 to Jul. 13 - Held that - The Hon ble jurisdictional High Court in the case of M/s. India Cements Ltd., 2015 (3) TMI 661 - MADRAS HIGH COURT has considered the same issue and held that such items used for fabrication of capital goods and for support of various machines like crusher, kiln, hoopers etc., is eligible for credit. In the Show Cause Notice it is alleged that the appellants have not declared to the department as to what is the capital goods they have manufactured using the MS Angles, Channels etc. That the description or chapter heading of such capital goods is not stated. The Chartered Engineers Certificate is produced to show that MS Angles, Channels etc., were used for manufacture of capital goods. The SCN does not specifically allege that these are used for support structures, but merely states that the details of capital goods fabricated is not declared. The appellant is eligible for credit - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of Cenvat credit on certain items under the category of "capital goods."

Analysis:
The case involved a dispute regarding the eligibility of availing Cenvat credit on items like MS Angles, MS Plates, MS Channels, MS Joist, HR Plates, etc., under the category of "capital goods" as per the Cenvat Credit Rules, 2004. The department contended that these items did not fall within the definition of capital goods and thus were not eligible for credit, leading to the issuance of a show-cause notice proposing disallowance of credit, recovery of the amount with interest, and imposition of penalties.

The appellant argued that the items in question, such as MS Angles and Channels, were essential for the fabrication of capital goods like furnaces, without which the final products could not be manufactured. The appellant relied on various legal precedents, including a decision by the Hon'ble Apex Court, to support their claim that the items in question passed the user test for being classified as capital goods. Additionally, the appellant highlighted that a Chartered Engineer's Certificate was provided to establish the usage of these items in the fabrication and erection of capital goods.

The Commissioner (Appeals) had upheld the original authority's decision to disallow the credit, stating that the items were not eligible as capital goods. However, the appellant contended that the Commissioner (Appeals) had not considered the Chartered Engineer's Certificate and had passed the order without duly considering the submissions made during the personal hearing.

Ultimately, the Tribunal, following the decisions of the jurisdictional High Court, held that the appellant was indeed eligible for the credit on the disputed items. The Tribunal set aside the impugned order, allowing the appeal with consequential reliefs, if any. The Tribunal's decision was based on the argument that the items were used for the fabrication of capital goods and were essential for the manufacturing process, as supported by the Chartered Engineer's Certificate provided by the appellant.