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2020 (3) TMI 834 - AT - Central ExciseCENVAT Credit - inputs/capital goods - MS Items - angles, channels and plates which are used for construction of plant and supporting structures of machinery - period from September 2008 to December 2010 - denial of credit on the ground that the MS items have been used as support structure of capital goods and for laying foundation - HELD THAT - It is not found that these items have been used as support structure for capital goods. In paragraph-2 the ld. Counsel has explained as to the purposes for which MS items were used. Apart from a bald allegation in the SCN that these items are used as support structures, department has not put forward any cogent evidence to show that these are support structures for particular item of capital goods. As these items have not been used as support structures or for laying foundation, we find that the disallowance of credit is unjustified. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Eligibility of Cenvat credit on various items used in the manufacturing process. 2. Application of the exclusion clause in Rule 2(k) of the Cenvat Credit Rules post-amendment on 07.07.2009. 3. Validity of the department's evidence and claims regarding the use of items for support structures and foundations. 4. Interpretation and application of relevant case laws and judicial precedents. Issue-wise Detailed Analysis: 1. Eligibility of Cenvat Credit on Various Items: The appellant argued that items such as welding rods, pipes, electronic regulators, HR sheets, pumps, ropes, joints, structural material, SS welding tubes, and structural supports for batch centrifugal machines qualify as inputs under Rule 2(k) of the Cenvat Credit Rules. Each item was detailed in terms of its necessity and integral role in the manufacturing process: - Welding Rods: Used to weld and assemble columns necessary for production, falling within the definition of "Input." - Pipes: Essential for handling high-temperature and high-pressure fluids post-crushing stage. - Electronic Regulator: Crucial for regulating crushing activities to prevent scaling and ensure efficient sugar processing. - HR Sheets: Used to form vessels for heating juice, integral to sugar manufacture. - Pumps and Ropes: Necessary for fluid transfer and preventing leakages during production stages. - Joints: Used to connect pipelines, valves, pumps, and vessels, ensuring leak-proof fluid flow. - Structural Material and SS Welding Tubes: Used for constructing platforms and vessels, essential for heating juice and supporting machinery. - Structural Supports for Batch Centrifugal Machines: Required to maintain stability during high-speed operations. 2. Application of the Exclusion Clause Post-Amendment on 07.07.2009: The appellant contended that the exclusion clause for MS angles, channels, etc., used for laying foundations or support structures of capital goods was introduced only from 07.07.2009. The department disallowed credit for the entire period from September 2008 to December 2010 without evidence that these items were used for such purposes. The Tribunal found no cogent evidence from the department to prove that the items were used as support structures or for laying foundations. 3. Validity of Department’s Evidence and Claims: The Tribunal noted that the department's allegations were based on bald assertions without substantial evidence. The appellant successfully demonstrated that the items in question were not used for support structures or foundations but were integral to the manufacturing process. The Tribunal emphasized that even post-amendment, the restriction applied only to items used for laying foundations or as support structures, which was not the case here. 4. Interpretation and Application of Relevant Case Laws: The Tribunal relied on several judicial precedents to support its decision: - CCE Meerut Vs Bajaj Hindustan Ltd.: Affirmed that items used for repair and maintenance, integral to manufacturing, are eligible for Cenvat credit. - Thiru Arooran Sugars & Others: Held that MS structurals supporting plant and machinery are integral parts of capital goods, thus qualifying for Cenvat credit. - Other Cited Cases: Supported the view that items used in activities with a nexus to manufacturing are eligible for credit. Conclusion: The Tribunal concluded that the disallowance of credit by the department was unjustified. The items in question were integral to the manufacturing process and did not fall under the exclusion clause post-amendment. The appeal was allowed with consequential relief, setting aside the impugned order.
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