2015 (10) TMI 1939 - AT - Central Excise

CENVAT Credit - whether the appellant is entitled to avail Cenvat credit of duty paid on Cement and Steel Pars, which stand used for the construction of Silo, used for the storage of cement bags - Held that - No merits in the above distinction sought to be made by the learned DR. Storage facilities whether for storing of liquid or storing of solid goods remains storing facilities only and once such storage is essential and is required for smooth running of the factory, the construction of the same has to be held in connection with business activity and the materials used in the construction of the same cannot be denied the Cenvat credit. As such, by following the above decisions, I find no merits of the impugned orders of authorities below. Accordingly, the same are set aside - Decided in favour of assessee.

Summary

Issues involved: Whether the appellant is entitled to avail Cenvat credit of duty paid on Cement and Steel Pars used for the construction of Silo for storing cement bags.

Analysis:

Issue 1: Entitlement to Cenvat credit
The main issue in the present appeal was whether the appellant could avail Cenvat credit of duty paid on Cement and Steel Pars used for constructing a Silo for storing cement bags. The credit availed by the appellant in March 2009 was denied on the grounds that the construction of Silos was not considered an activity connected with their business to allow Cenvat credit on the duty paid.

Issue 2: Precedents and legal decisions
The judge referred to several legal decisions to support the appellant's claim, including Bannari Amman Sugars Ltd. v. CCE, Mysore, CCE, Bangalore-II v. SLR Steels Ltd., CCE, Mysore v. ICL Sugars Ltd., CCE, Belgaum v. Doodhaganga Krishna Sahakari Sakkare Karkhane Niyamit, Sai Samhita Storages P. Ltd. v. CC & CE, Visakhapatnam-II, CCE, Visakhapatnam-II v. Sai Sahmita Storages (P) Ltd., and CCE, Jalandhar v. Pioneer Agro Extracts Ltd. These decisions established that cements and steel items used for constructing storage tanks are admissible as cenvatable inputs.

Issue 3: Argument against the distinction made by Revenue
The Revenue attempted to differentiate the present case from the cited legal decisions by highlighting that the silo in question was meant for storing cement bags, unlike the storage tanks in the previous cases that stored liquid waste. However, the judge found no merit in this distinction. The judge emphasized that storage facilities, whether for liquids or solid goods, serve the same purpose of storage and are essential for the smooth operation of a factory. Therefore, the construction of such facilities should be considered connected with business activity, and the materials used should not be denied Cenvat credit.

Conclusion:
In conclusion, the judge held that the construction of the Silo for storing cement bags was indeed connected with the appellant's business activity. By following the established legal precedents, the judge found no merit in the decisions of the lower authorities that denied the Cenvat credit. Consequently, the impugned orders were set aside, and the appeal was allowed with consequential relief.