2009 (2) TMI 320 - AT - Central Excise

Credit on capital goods - Cenvat credit on various items like MS Plates/Angles/Beams/Joists etc. - It is undisputed that the respondent has received these MS Plates/Angles/Beams/Joists etc. in their factory and utilized the same as input for fabrication of Reactors, Reactor jackets, Condensors, Receiver tanks and to build the working flat form for all around the reactors, condensers and receiver tanks. It is seen that Channels were used for structural work to erect the reactors, condensers, receiver tanks, vacuum pumps, etc., Angles for staircase steps and hand railing in the production plants. Beams/Joists used for structural work. - Chartered Engineer certified that without these props and without such usage, the machinery cannot function in the factory. Credit not deniable revenue s appeal is rejected

Summary

Issues:
Appeal against Order-in-Appeal challenging the Cenvat credit availed on MS Plates/Angles/Beams/Joists as 'capital goods.'

Analysis:
The case involved a dispute regarding the availing of Cenvat credit by the respondents on items like MS Plates/Angles/Beams/Joists under the classification of 'capital goods.' The lower authorities contended that the Cenvat credit availed was incorrect, leading to a show cause notice for reversal of the amount. The Adjudicating Authority upheld the demand for payment and imposed a penalty, which was later set aside by the learned Commissioner (Appeals). The Revenue, aggrieved by this decision, appealed before the Appellate Tribunal.

The Departmental Representative argued that the credit availed on MS Plates etc. was improper, emphasizing that these items did not fall within the definition of capital goods as per the Cenvat Credit Rules. They cited various judgments to support their contention that such items were not eligible for Cenvat credit. On the other hand, the Counsel for the respondent argued that the items were used as components, spares, or accessories in their factory, citing precedent cases to support their position.

Upon considering the submissions and evidence, the Tribunal found that the items in question, namely MS Plates/Angles/Beams/Joists, were indeed used by the respondent in their production plant for various essential purposes, such as fabrication of machinery components and structural work. The usage of these items was certified by a Chartered Engineer, confirming their necessity for the functioning of the machinery in the factory. The Tribunal noted that the issue had been previously addressed in the case of Divi's Laboratories Ltd. v. CCE, where a similar situation was deemed eligible for Cenvat credit.

Based on the evidence presented and the precedents cited, the Tribunal concluded that the impugned order was correct, legal, and proper. They upheld the decision of the learned Commissioner (Appeals) and rejected the appeal filed by the Revenue, emphasizing that the items in question were legitimately used in the production process and therefore qualified for Cenvat credit.