2015 (10) TMI 2072 - AT - Central Excise

Denial of CENVAT Credit - Manufacture of capital goods - Held that - Tribunal failed to appreciate this contention and disallowed the credit. Presently, the credit is claimed as inputs used for manufacturing capital goods and not as capital goods. - CENVAT Scheme is a beneficial legislation and should be given as wider meaning as possible. Inputs mean anything, i.e., put into the stream of manufacture. In the instant case, the contention of appellant is that the Sections, Shapes, Channels, Angles were used for fabrication of moulds. That moulds being specifically mentioned in the definition of capital goods, these items which were used for manufacture of moulds are eligible for credit. It is also the case of appellant that TMT Bar was used for stirring the metal and by its use becomes a constituent of the final product. The requirement of stirring rod in the process of manufacture is undeniable. To establish their contention, the appellants have produced a Chartered Engineer Certificate along with photographs showing the steps of manufacture/fabrication of moulds. This certificate explains the use of the impugned items in manufacture of moulds and also use of such moulds in the appellants industry. - as already stated moulds being specified as capital goods, the inputs used for manufacture of capital goods are eligible for credit. - Decided in favour of assessee.

Summary

Issues:
Challenge to denial of CENVAT Credit on inputs claimed for manufacturing capital goods.

Detailed Analysis:

Issue 1: Denial of CENVAT Credit
The appeal challenges the denial of CENVAT Credit on inputs claimed to be used in the manufacture of capital goods. The appellant, engaged in the manufacture of steel ingots and castings, availed credit on items like Shapes, Sections, Angles, Channel, TMT bars, and welding electrodes as inputs. The dispute arose when the department objected to these items not falling under the definition of inputs. The appellant claimed that these items were used for the manufacture of capital goods, specifically for making moulds and stirring metal in the furnace.

Issue 2: Admissibility of Credit
The appellant contended that the items in question, such as Shapes, Sections, Angles, Channels, and TMT Bar, were essential inputs used in the fabrication of moulds and stirring of metal during the manufacturing process. The department argued against the admissibility of credit, citing a previous tribunal decision where credit was denied on similar items. However, the appellant provided evidence, including a Chartered Engineer Certificate and photographs, demonstrating the use of these items in the manufacture of moulds.

Issue 3: Interpretation of Inputs
The Tribunal analyzed the definition of inputs under the CENVAT Scheme, emphasizing that the term should be construed liberally to promote the scheme's objectives. The appellant's argument that the disputed items were used in the fabrication of moulds, which are considered capital goods, supported their claim for credit on these inputs. The Tribunal also referenced a previous case where credit was allowed on inputs used for manufacturing capital goods, further strengthening the appellant's position.

Conclusion:
After considering the arguments and evidence presented, the Tribunal concluded that the disputed items were indeed used as inputs for manufacturing capital goods, specifically moulds in this case. Given the beneficial nature of the CENVAT Scheme, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief.