2014 (9) TMI 848 - AT - Central Excise

Disallowance of CENVAT Credit - credit demand was confirmed on the basis that the goods received from M/s Surya Roshni were tube lights and not M.S. Tubes and that the PVC/HDPE Tubes were not eligible for capital goods Cenvat credit - Held that - the terms pipes and tubes covers all pipes and tubes whether of iron and steel or of PVC or HDPE. Therefore, disallowing the credit in respect of PVC/HDPE pipes which according to the appellant were used in effluent treatment plant is totally wrong - As regards the MS tubes received under the invoice of M/s Surya Roshni Ltd., the Department s stand that the goods supplied are tube lights and not MS tube is absurd. If the Department had any doubt the necessary verification could have been done instead of the disallowing the credit. The fact as to whether M/s Surya Roshni Ltd. have a steel division and manufacture steel tubes could be checked from their web-site on the internet. Moreover, when the invoice itself mentions the goods as MS tubes of heading 73063090 and from the value of the goods, the same cannot the tube lights, it is absurd to infer just on the basis of the name of the supplier that the goods supplied were tube lights and that too without making slightest effort to ascertain whether M/s Surya Roshni manufacture only the light fittings or also manufacture steel pipes also. order disallowing the credit in respect of M/s Surya Roshni Ltd. is, therefore, not sustainable. The same is set aside - Decided in favour of assessee.

Issues:
1. Disallowance of Cenvat credit on MS tubes and PVC/HDPE pipes.
2. Classification of goods received from suppliers.
3. Eligibility of PVC/HDPE pipes as capital goods.
4. Evidence of use of items for Cenvat credit.

Analysis:
1. The appellant, a manufacturer of Terry Towel and Terry Towel Fabrics, faced disallowance of Cenvat credit amounting to Rs. 54,004 based on invoices from suppliers M/s Surya Roshni Ltd. and M/s Adventec Polymers P. Ltd. The Department contended that goods received were not eligible for credit, leading to a show cause notice, order-in-original, and penalty imposition. The Commissioner (Appeals) upheld the decision, prompting the appellant to file an appeal challenging the disallowance.

2. The appellant argued that the goods supplied by M/s Surya Roshni Ltd. were MS tubes and not tube lights, as claimed by the Department. Additionally, the appellant asserted that the MS tubes and PVC/HDPE pipes received were used in their effluent treatment plant, making them eligible for Cenvat credit as capital goods. The Department, however, reiterated its stance, supporting the findings of the Commissioner (Appeals).

3. The Tribunal analyzed the invoices and submissions from both parties. It noted that the dispute revolved around the classification of goods and their eligibility for Cenvat credit. The appellant maintained that MS tubes and PVC/HDPE pipes fell under the definition of "pipes and tubes" as capital goods, emphasizing their use in the effluent treatment plant. The Department's argument that the goods were not covered under the definition was deemed incorrect by the Tribunal.

4. Regarding the goods supplied by M/s Surya Roshni Ltd., the Tribunal found the Department's claim that they were tube lights instead of MS tubes to be baseless. The Tribunal criticized the lack of verification by the Department and highlighted that the invoice clearly specified the goods as MS tubes. The Tribunal deemed the disallowance of credit on MS tubes unsustainable and set aside the impugned order, allowing the appeal with consequential relief.

This comprehensive analysis of the judgment highlights the key issues, arguments presented by both parties, and the Tribunal's reasoning leading to the decision in favor of the appellant.

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