2008 (2) TMI 145 - AT - Central Excise

H.R. Sheets H.R. Coil Shape and Sections etc. of Iron and Steel product used in the mfg. of capital goods which in turn used in the manufacture of final product credit cannot be denied - Asbestos packing/compressed asbestos fibres used for preventing leakage in pipes in sugar mill are eligible for credit - RMP Tee Nozzle for Cooling purpose EN9 Load Screw Part of cane unloader Copper Strip & Aluminium Sheet etc. used in or in relation to mfg. of final product credit allowed

Summary

Issues:
Denial of credit on various items like S.S. Plate, H.R.S.S. Plate, Hot Rolled Plate, C.R.S.S. Coil, Cold Rolled Strip, etc.

Analysis:
The judgment dealt with the denial of credit on multiple items like Iron and Steel products, Asbestos Packing, Graphite Packing, and various other materials. The first issue revolved around items such as H.R. Sheets, H.R. Coil, Shape and Sections of Iron and Steel products. The Commissioner (Appeals) argued that these items, although used in machinery, should not be considered as components or spares of capital goods. However, citing precedents, it was established that these items, when used in the manufacture of final products, are eligible for credit. The judgment referred to decisions by the Hon'ble Rajasthan High Court and the Tribunal to support the eligibility of these items for credit. It was clarified that credit would not be available if these items were used for structural and building materials.

The second issue addressed in the judgment concerned Asbestos Packing, Graphite Packing, and similar items. These materials were used to ensure leak-proof joints in pipes for the manufacture of finished products. The Tribunal's decision in a previous case supported the eligibility of these items for credit, as they were essential in preventing leakage in pipes used in the manufacturing process. Following this precedent, the credit on these items was allowed.

Lastly, the judgment discussed items like RMP Tee Nozzle for Cooling, EN9 Load Screw Part of cane unloader, Copper Strip, and Aluminium Sheet. The appellant argued that these items were crucial for specific purposes in the manufacturing process, such as vapour handling and bagasse discharging. While the lower authorities deemed these items as structural building materials, it was noted that they were indeed used for manufacturing activities related to the final products of sugar, molasses, and bagasse. Therefore, it was concluded that these items were eligible for credit as they were used in or in relation to the manufacture of the final products. Consequently, the appeal was allowed based on the discussions and findings presented in the judgment.