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2022 (5) TMI 475 - AT - Central ExciseCENVAT Credit - goods used for civil construction purpose or repairs - inputs/Capital Goods or not - M.S Beams - M.S. Pipes - Plates - Channels - Sheets - Flats - Chain - Anodes - Tube - Conveyor Belts - Filter Bags - S.S. Structures - Tyres - Rope - Welding Electrodes etc. - period June 2007 to December 2007 - HELD THAT - The department have erred in relying upon the amended Explanation-II with effect from the year 2009, whereas admittedly the credits in question were taken during period June 2007 to Dec. 2007. We further find that the ruling in the case of VANDANA GLOBAL LTD. VERSUS CCE 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) , have been overruled by Hon ble Gujarat High Court in the case of MUNDRA PORTS AND SPECIAL ECONOMIC ZONE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS 2015 (5) TMI 663 - GUJARAT HIGH COURT and by Hon ble Madras High Court in the case of M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX THE COMMISSIONER OF CENTRAL EXCISE, 2015 (3) TMI 661 - MADRAS HIGH COURT , wherein it is categorically held that steel items and supporting structures are essential part of the machinery, so as to run the same for manufacture of dutiable finished products. Accordingly, the Hon ble High Court held that the steels items used in the plant and machinery and supporting structures are eligible for Cenvat credit. In the present matter use of the impugned goods were not disputed by the department, further revenue also not disputed the Joint verification report duly signed by the Deputy Commissioner, Central Excise, Gandhidham and representative of assessee. The said verification report has categorically described the usage of the materials under dispute on which cenvat credit has been availed by the assessee. The issue of utilization of goods for repairs and maintenance of capital goods is no longer res integra and the same have been decided in favour of the assessee by number of decisions. If any items is used for repair and maintenance of the plant and machinery, the same would be eligible for Cenvat credit. Whether the disputed items in question are also used for repairs/maintenance of capital goods by way of replacement of old/worn out parts/components of such capital goods? - HELD THAT - This factual position is to be seen through the verification reports. However, the revenue has proceeded on the premise that the disputed items were used for fabricating/manufacturing of capital goods. If this finding is presumed to be correct for a moment, then there is a prima facie case for holding that the disputed items were used in the manufacture of capital goods and, hence, by virtue of the aforesaid Explanation to the definition given under Rule 2(k), disputed items could be considered as inputs - the credit is admissible on the disputed goods in question. Denial of credit on Aluminium Zinc anodes which was used in laboratory of the factory - HELD THAT - The said laboratory is functioning in the factory of the appellant for quality checks of raw materials and finished goods. The impugned goods were used in laboratory of appellant, which ultimately used for manufactured goods and satisfy the definition of input, hence the Cenvat credit should not be denied to the assessee. Denial of CENVAT Credit availed on goods which were used in the erection of transmission towers installed from the power plant to the factory for bringing in the electricity - HELD THAT - The Ld. Commissioner observed that the primary condition in respect of the goods which may qualify the definition of either inputs or capital goods under Cenvat Credit Rules, 2004 is that they have to be used within the factory of manufacture. This criteria has not been satisfied in this matter - In the present matter impugned goods were used in the erection of transmission towers installed from the power plant to the factory of appellant for bringing the electricity, the said electricity undisputedly used in the factory premises of the Appellant for manufacturing their final product which has been cleared on payment of duty - the appellant has correctly availed the credit on disputed goods. Denial of credit availed on furniture - HELD THAT - There is no dispute that the said furnitures are used in guest house and the guest house is part of factory. In Board s Circular No. 943/4/2011-CX, dated 29-4-2011, it is mentioned that goods such as furniture and stationery used in an office within the factory are goods used in the factory and are used in relation to the manufacturing, business and hence, the credit on the same is to be allowed - Undisputedly, the guesthouse is used for operations of the factory. Nothing is available on record to show that guesthouse is used for any other purpose. In view of this fact, since guesthouse used for operations of factory which has direct nexus with factory which produces excisable goods therefore Cenvat credit is admissible to the appellant on the furnitures used in Guest House of the factory. The Revenue s appeal being devoid of merit is dismissed - Decided against Revenue.
Issues Involved:
1. Eligibility of Cenvat credit on various items used for maintenance and repair of plant and machinery. 2. Denial of Cenvat credit on Aluminium Zinc anodes used in laboratory. 3. Denial of Cenvat credit on items used for erection of transmission towers. 4. Denial of Cenvat credit on furniture used in the guest house within the factory premises. Issue-wise Detailed Analysis: 1. Eligibility of Cenvat credit on various items used for maintenance and repair of plant and machinery: The appellant availed Cenvat credit on items such as M.S Beams, M.S. Pipes, Plates, Channels, Sheets, Flats, Chain, Anodes, Tube, Conveyor Belts, Filter Bags, S.S. Structures, Tyres, Rope, Welding Electrodes, etc. The Revenue contended that these items, used for civil construction or repairs, do not qualify as inputs or capital goods under Rule 2 of the Cenvat Credit Rules, 2004. However, the Joint Verification Report by the Assistant Commissioner of Central Excise and the DGM (Excise) of the assessee supported the appellant's claim. The Tribunal found that the department erroneously relied on the amended Explanation-II effective from 2009, while the credits in question pertained to June 2007 to December 2007. Citing precedents, the Tribunal concluded that items used for repair and maintenance of plant and machinery are eligible for Cenvat credit. 2. Denial of Cenvat credit on Aluminium Zinc anodes used in laboratory: The Commissioner denied credit on Aluminium Zinc anodes amounting to Rs. 12,304/-, used in the laboratory for quality checks of raw materials and finished goods. The Tribunal noted that the laboratory is integral to the manufacturing process, and the anodes used therein satisfy the definition of input. Hence, the Cenvat credit should not be denied. 3. Denial of Cenvat credit on items used for erection of transmission towers: The Commissioner denied Cenvat credit of Rs. 9,88,421/- on goods used for erecting transmission towers to bring electricity from the power plant to the factory, arguing that the goods must be used within the factory premises. The Tribunal, referencing the Hindalco Industries Ltd. case, held that the power plant and factory constitute an integrated unit. As the electricity generated is primarily used in the factory for manufacturing, the credit on such goods is admissible. The Tribunal also cited the Steel Authority of India Ltd. case, affirming that the location of capital goods outside the factory premises does not preclude credit eligibility. 4. Denial of Cenvat credit on furniture used in the guest house within the factory premises: The Commissioner denied Cenvat credit of Rs. 11,39,646/- on furniture used in the guest house, asserting it does not qualify as factory use. The Tribunal referred to the Board's Circular No. 943/4/2011-CX, which allows credit on furniture used in offices within the factory. The Tribunal found that the guest house is used for factory operations, thereby directly relating to the manufacturing business. Consequently, the credit on furniture used in the guest house is admissible, as supported by the Agarwal Foundries case. Conclusion: The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal, affirming the eligibility of Cenvat credit on all disputed items.
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