2020 (3) TMI 14 - AT - Central Excise

CENVAT credit - input/capital goods/input services - railway construction materials and wagons which were used to main railway tracks and for transportation of raw materials, finished goods within the factory premises - HELD THAT - The identical issue pertaining to the railway track came before the Tribunal in the case of M/S. TATA STEEL LTD., M/S. SAIL, DURGAPUR STEEL PLANT AND COMMISSIONER OF CENTRAL EXCISE, BOLPUR VERSUS CCE, JAMSHEDPUR, CCE, BOLPUR AND M/S. SAIL, DURGAPUR STEEL PLANT 2016 (1) TMI 1059 - CESTAT KOLKATA and relying upon the judgement of the Hon ble Supreme Court in the case of M/S JAYASWAL NECO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR 2015 (4) TMI 569 - SUPREME COURT , whereby the cenvat credit was allowed on railway track material used for handling raw materials, process goods. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Cenvat credit on railway construction materials and wagons for transportation within factory premises.

Analysis:
The appeal involved a dispute regarding the period from July 2009 to September 2012, where the appellant, engaged in steel manufacturing, claimed cenvat credit on railway construction materials and wagons used for transportation within the factory premises. The appellant relied on a Tribunal decision in Tata Steel Ltd. Vs. CCEx., Jsr. to support their claim. The lower authority allowed the credit on the basis that the materials were part of the material handling system used for transportation of raw materials and finished goods within the factory premises. The appellant specifically challenged the denial of cenvat credit on wagons used for transfer of raw materials and finished goods within the factory premises.

The Tribunal, after hearing both sides and examining the records, referred to a similar issue in Tata Steel Ltd. Vs. CCEx., Jamshedpur and the judgment of the Hon'ble Supreme Court in Jayaswal Neco Ltd. Vs. CCEx., Raipur. The Supreme Court's decision emphasized that the use of railway tracks for actual production of goods is crucial and integral to the manufacturing process. The appellant's detailed explanation of how railway tracks were utilized within the plant to transport hot metal and raw materials was accepted. The Tribunal noted that the railway tracks formed an essential part of the manufacturing process, as without them, manufacturing of pig iron would be impractical. The Commissioner's denial of relief based on incidental use of railway tracks for other purposes was deemed incorrect, as it did not diminish their integral role in the manufacturing process. By following the Supreme Court's ruling and the detailed reasoning provided, the Tribunal allowed the appeal filed by the appellant.

In conclusion, the judgment resolved the issue of cenvat credit on railway construction materials and wagons used for transportation within the factory premises. It clarified the importance of railway tracks in the manufacturing process and upheld the appellant's claim based on the Supreme Court's precedent and the specific application of the materials for production activities within the plant premises.