2016 (1) TMI 59 - AT - Central Excise

Cenvat Credit - input used for manufacture of capital goods to be used captive - Exemption under Notification No. 67/1995-CE dated 16/03/1995 - steel structures which are emerging are not capital goods - CENVAT Credit - Held that - All the frames are essential accessory of that machine with which it is installed. The third group is consist of chimney and flue duct. Chimney is used for emission of fumes and gases and flue duct is used for holding transferring gases for their emission through chimney. They are essential accessories in the respondent plant. Therefore, all the impugned goods as mentioned above are covered in the scope of term accessories in the definition of capital goods at clause (ii) of Rule 2 (b) of the Cenvat Rules because they are specifically designed, fabricated/manufactured as per specific technical requirements and they are technological necessity of the plant for the manufacture of Iron and steel products in respondent s factory and they are essentially required for running the plant and machinery. Since no evidence has been adduced to establish that these goods have not been used in the factory of manufacturer and therefore the respondent has complied with the condition of Rule 2 (b) of Cenvat Rules that such goods should be used in the factory of the manufacturer of final product It is not possible to compare Steel Support Structures of Conveyors to Crane Girder, Crane Column in as much as the later items are very much part or accessories necessary for functioning of the Crane, Mere allegation that impugned goods are used in foundation or construction platform is not sufficient to deny the benefit in view of specific and categorical findings of both the lower Authorities. - Decided against Revenue.

Summary

Issues:
- Appeal by Revenue against Commissioner (Appeals) order.
- Denial of exemption on certain goods.
- Classification of goods as capital goods.
- Interpretation of Cenvat Credit Rules.
- Examination of impugned goods.

Analysis:
1. The appeal by the Revenue was against the order of the Commissioner (Appeals) regarding the denial of exemption on certain goods claimed by the respondent. The respondent, engaged in manufacturing Sponge Iron and Iron Steel products, availed Cenvat credit on capital goods during an expansion project. The Original Authority allowed the exemption but confirmed a demand on specific items. The Commissioner (Appeals) upheld the Original Authority's decision, leading to the Revenue's appeal.

2. The main contention in the appeal was whether the impugned goods could be classified as capital goods under the Cenvat Credit Rules. The Revenue argued that the goods were not covered under specific chapters of the Central Excise Tariff Act and were merely support structures for machinery. However, the respondent claimed that the goods were specifically designed for use with machinery and were essential parts or components of the machinery.

3. The Commissioner (Appeals) examined the nature and function of each impugned item and classified them into three groups. The first group included goods like Crane Girder and Crane Rail, essential for the functioning of EOT crane. The second group consisted of Base Frames for various machines, necessary for installation and rigidity. The third group comprised items like chimney and flue duct, essential for emission purposes. The Commissioner concluded that all impugned goods fell under the definition of 'accessories' in the Cenvat Rules.

4. Various case laws were examined, and the Commissioner upheld the original order based on detailed findings and specific requirements of the impugned goods. The Tribunal found no reason to interfere with the Commissioner's decision, dismissing the Revenue's appeals. The Tribunal also clarified that comparing Steel Support Structures to Crane Girder was not appropriate, as the latter were integral parts necessary for the functioning of the machinery.

5. In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) and dismissed the appeals filed by the Revenue, emphasizing the specific design and technical necessity of the impugned goods for the manufacturing process in the respondent's factory.