2012 (9) TMI 603 - AT - Central Excise

Denial of CENVAT Credit on MS round - not eligible input - Held that - On considering the process initiated for manufacture of the said exciseable final products i.e. ferro alloys products it can be concluded that in order to tap the molten metal, MS round is used, which strikes the pointed furnace wall. Being pushed inside the furnace for making leakage point to bring the hot liquid molten metal out of the furnace, both the lancing pipe as well as MS round are used. These during the process get melted/consumed with the hot liquid metal inside the furnace. The use of MS round is essential as no manual operation is possible under such high temperature. Thus the use of MS round is part of the manufacturing process. Not only is it just part of the manufacturing activity, in fact it is an essential process without which no taping can be done and without which the finished product cannot be manufacture - in favour of assessee.

Summary

Issues involved:
Appeal against Order-in-Appeal setting aside lower adjudicating authority's order regarding eligibility of CENVAT Credit on MS round used in manufacturing iron and steel products.

Analysis:
The Revenue contended that MS round does not qualify as input under Rule 2K of CENVAT Credit Rules, 2004, as it is not used directly or indirectly in the manufacturing process. They argued that it also does not meet the definition of capital goods under Rule 2(a) of the same Rules.

The Respondent's advocate argued that MS round is integral to the manufacturing process as it is used to create a hole in the furnace for tapping molten metal, eventually getting melted and reduced in size after repeated use. They claimed that this qualifies MS round as an input used in or in relation to the manufacturing process.

The Tribunal reviewed the submissions and the findings of the Commissioner(Appeals), who highlighted the technological necessity of using MS round in the manufacturing process. The Commissioner noted that the MS round is crucial for tapping molten metal, as manual operation is impossible under high temperatures. Referring to a Supreme Court decision, the Commissioner concluded that the use of MS round is an essential part of the manufacturing activity, allowing the CENVAT credit on duty paid for MS rounds.

The Tribunal upheld the Commissioner's decision, stating that the Revenue failed to provide any evidence to counter the clear and cogent findings of the Commissioner. Consequently, the Tribunal dismissed the appeal filed by the Revenue, affirming the Commissioner's order setting aside the lower adjudicating authority's decision.