2016 (8) TMI 488 - AT - Central Excise

Cenvat credit - Steel items - MS channels, MS beams, MS angles, HR coils/sheets and MS Joists used for construction and maintenance of structures for supporting capital goods and for construction of gypsum shed used for storing gypsum - Held that - in view of the ratio of Supreme Court decision in the appellant s own case where it was held that the goods which are used in construction of concrete structure and foundation on which the various heavy machineries in a cement plant was to be erected are entitled for CENVAT Credit. Therefore, the appellant is entitled to CENVAT credit on the disputed items. - Decidde in fvaour of appellant

Summary

Issues:
1. Disallowance of CENVAT credit for various steel items used in construction and maintenance.
2. Interpretation of CENVAT Credit Rules, 2004 regarding eligibility for credit on steel items.
3. Application of precedents and judgments in determining admissibility of CENVAT credit.

Issue 1: Disallowance of CENVAT credit for steel items used in construction and maintenance:
The appellant, a cement manufacturer, availed CENVAT credit for steel items like MS channels, beams, angles, HR coils/sheets, and Joists used in construction and maintenance of structures. The dispute arose when the audit party objected to this credit, leading to a show-cause notice for recovery of the credit along with penalties and interest. The Assistant Commissioner upheld the objection, relying on the ruling of Vandana Global Ltd., and imposed penalties and interest. The Commissioner (A) also rejected the appeal, prompting the appellant to file appeals before the Tribunal.

Issue 2: Interpretation of CENVAT Credit Rules, 2004 regarding eligibility for credit on steel items:
The appellant argued that the steel items used for supporting structures are covered under Rule 2(a)(A)(iii) of the CENVAT Credit Rules, 2004, and thus, the credit cannot be denied. Citing various judgments, including the Larger Bench ruling in Jawahar Mills Ltd. and Balapur Industries Ltd., the appellant contended that the capital goods credit availed for construction purposes aligns with the rules. The appellant also highlighted judgments like Madras Cements vs. CCE, Trichy, emphasizing the admissibility of credit for items used in fabrication of structures. In contrast, the AR supported the impugned order by referring to decisions like Saraswati Sugar Mills vs. CCE, Delhi-III, arguing against the eligibility of credit on steel items.

Issue 3: Application of precedents and judgments in determining admissibility of CENVAT credit:
The Tribunal analyzed precedents and judgments to determine the eligibility of CENVAT credit on steel items used in construction. Referring to the Madras High Court's decision in CCE vs. India Cement Ltd. and the Supreme Court's ruling in India Cements Ltd. vs. CCE, the Tribunal held that steel items used in the erection of structures for machinery can be considered eligible for CENVAT credit as components of capital goods. The Tribunal emphasized that goods used in construction of concrete structures for heavy machinery in a cement plant are entitled to credit, following the principles laid down in previous cases. Consequently, the Tribunal allowed both appeals of the appellant, setting aside the impugned orders with consequential relief.

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