2016 (9) TMI 734 - AT - Central Excise

Cenvat Credit - eligible input - steel and bent - EOT Crane and Gratings - inputs or capital goods - Held that - when structures like rollers, pulleys and guide rails are essentially required for the functioning of crane then the same have to be treated as an accessory of the machines for which Cenvat Credit under Cenvat Credit Rules is admissible. So far as Cenvat Credit on Gratings used for operating the furnace is concerned, it is observed that such platforms are essential for operating the machines used in the manufacture of finished goods. In the case of Rosa Sugar Works v. Commissioner of Central Excise, Lucknow (2005 (10) TMI 304 - CESTAT, NEW DELHI), CESTAT Delhi has held that ladders and gratings used for reaching different platforms of the machines, used for processing or procuring finished goods, are eligible to Modvat Credit under Rule 57A of the Central Excise Rules, 1944. Cenvat Credit with respect to EOT Crane and Gratings availed by the Appellant is available. However, Cenvat Credit with respect to steel and bent items is not agitated by the Appellant and is held to be inadmissible. - Decided partly in favor of assessee.

Summary

Issues:
1. Admissibility of Cenvat Credit on EOT Crane and Gratings.

Analysis:

Admissibility of Cenvat Credit on EOT Crane:
The Appellant contended that the Cenvat Credit denied pertained to EOT Crane and Gratings. The Advocate argued that EOT Cranes are essential for the working of the machinery and should be classified as accessories under Cenvat Credit Rules. Referring to HSN Explanatory Notes, it was highlighted that fixed parts of the cranes are crucial for their operation and should be considered as accessories. The Advocate relied on case laws where credit on similar accessories had been allowed. On the other hand, the Revenue argued that items like EOT Crane were merely support structures and not eligible for Cenvat Credit.

Analysis of EOT Crane Cenvat Credit:
Upon examination, it was observed that certain parts like pulleys and rails were essential for the functioning of the EOT Crane. The HSN Explanatory Notes clarified that when such machines are designed with mechanical features essential for operation, they should be classified as accessories. Citing the case law of Commissioner of Central Excise, Raipur v. Jindal Steels & Power Ltd., it was noted that the goods in question were essential accessories for the EOT crane and fell within the definition of capital goods. Consequently, the Cenvat Credit on EOT Crane was deemed admissible.

Admissibility of Cenvat Credit on Gratings:
Regarding the Cenvat Credit on Gratings, the Advocate argued that they were essential for the functioning of the furnace and cited a relevant case law to support the admissibility of such credit. The Revenue contended that items like Gratings were support structures and not eligible for credit.

Analysis of Gratings Cenvat Credit:
Upon review, it was found that Gratings used for operating the furnace were crucial for the manufacturing process. Referring to the case law of Rosa Sugar Works v. Commissioner of Central Excise, Lucknow, it was established that such items were eligible for Modvat Credit under the Central Excise Rules. The same rationale was applied to the Cenvat Credit of capital goods under the Cenvat Credit Rules. Consequently, the Cenvat Credit on Gratings was deemed admissible.

Conclusion:
In conclusion, the Appellant's appeal was partly allowed. The Cenvat Credit on EOT Crane and Gratings was found to be admissible based on the arguments presented and the established legal principles. However, the credit pertaining to steel and bent items, which was not contested by the Appellant, was held to be inadmissible. The decision was made in accordance with the observations and settled legal precedents discussed during the proceedings.