2019 (6) TMI 677 - AT - Central Excise

CENVAT credit - steel gas cylinders - denial of credit on the ground that the steel gas cylinders are used for transportation of the gas - HELD THAT - The cylinders are admittedly used for storage of gas during the process of manufacturing and also for transportation - In the case of JK. STEEL ALLOYS VERSUS COMMISSIONER OF C. EX., BHAVNAGAR 2007 (1) TMI 480 - CESTAT, AHMEDABAD , it is clearly held that the gas cylinder used for storage of high pressure gas for production in factory, entitled for credit as capital goods, therefore, the cenvat credit of steel gas cylinder is admissible - Credit allowed. CENVAT Credit - input - castor oil - credit was denied by the Revenue on castor oil on the ground that it is not used in the manufacturing and the credit was availed during the exemption period under SSI exemption - HELD THAT - Even though the appellant is availing the SSI exemption since the lubricating oil is covered under the capital goods, the cenvat credit is admissible for a very simple reason that even though the credit is availed during the exemption, the same is utilized only when the appellant starts paying excise duty and there is no dispute that the lubricating oil is used for lubrication of plant and machinery of the appellant factory - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues: Eligibility of Cenvat credit on steel gas cylinder and castor oil.

Analysis:
1. Steel Gas Cylinder: The appellant, engaged in manufacturing oxygen gas, availed Cenvat credit on steel gas cylinders used for storing and transporting gas. The department contended that since the cylinders were used for transportation, credit was inadmissible. The appellant argued that the cylinders were also used for storage during manufacturing. The Tribunal held that the cylinders were used for storage during manufacturing and transportation, making them eligible for credit. Citing precedent cases, the Tribunal supported the admissibility of Cenvat credit on steel gas cylinders as capital goods.

2. Castor Oil (Lubricating Oil): The appellant also availed Cenvat credit on castor oil, used as input in the manufacturing process. The Revenue denied credit during the exemption period under SSI exemption, claiming it was not used in manufacturing. The appellant argued that castor oil, considered a capital good at the time, was used for lubrication of plant and machinery. The Tribunal found the credit admissible, stating that even during the exemption period, the credit was utilized when excise duty was paid, and the oil was used for plant maintenance. The Tribunal allowed the Cenvat credit on castor oil.

3. Other Items: The appellant reversed Cenvat credit on Cement Sheet, MS Beams, and Nitrogen Gas, not contesting the demand related to these items. The Tribunal confirmed the demand and penalties on these items. The appeal was allowed for steel gas cylinders and castor oil, setting aside the demand for these items.