2016 (10) TMI 106 - AT - Central Excise

Section 35 B of Central Excise Act 1944 - amount of duty involved is less then 50, 000/- - Reversal of Cenvat credit - Cenvat credit taken on MS Plate Channels Angles etc. treating the same as capital goods - used for repair and maintenance of Plant and Machinery - Held that - the provisions of Section 35 B of Central Excise Act 1944 provide that the Tribunal in its discretion can refuse to admit an appeal where duty or differential duty or fine or penalty is less than 50, 000/- (Fifty thousand). I do not use such discretion in this case. The contention of the ld. Commissioner (Appeals) is that the impugned goods are treated as capital goods by the appellant at the time of taking of credit and that the claim about use of inputs for maintenance is only a general claim. The Department also relied as ruling of this Tribunal that when the use of inputs cannot be substantiated in repair and maintenance of machines then the credit has to be denied. I find that the impugned goods do not satisfy the definition of Capital Goods in said Cenvat Credit Rules 2004 and merely by such mention in the books of account they do not loose the substantive eligibility to be treated as inputs. Further I find that the original authority has gone through the material requisition slips and found as to where the impugned goods are used for maintenance and repair of machinery. Therefore I do not find the two observations of ld. Commissioner (Appeals) to be sustainable. - Decided in favour of appellant

Summary

Issues:
1. Admissibility of Cenvat credit on certain goods treated as capital goods.
2. Challenge to Order-in-Appeal before the Tribunal.
3. Consideration of proof of use of impugned goods.
4. Objection based on the amount of duty involved.
5. Interpretation of the definition of Capital Goods under Cenvat Credit Rules 2004.

Analysis:
1. The appellant, a manufacturer of goods, claimed Cenvat credit on MS Plate, Channels, Angles, treating them as capital goods under Chapter 48 of the Central Excise Tariff Act, 1985. However, the Revenue contended that these goods did not qualify as capital goods under the Cenvat Credit Rules, 2004. A show cause notice was issued for reversal of the credit. The original authority found that the goods were used for maintenance of machinery based on Material Requisition Slips and dropped the proceedings. The Commissioner (Appeals) set aside the original order, stating the appellant failed to specify which items were used for maintenance. The Tribunal held that the goods did not meet the definition of Capital Goods, but the original authority had correctly identified their use for maintenance, overturning the Commissioner's decision.

2. The appellant challenged the Order-in-Appeal before the Tribunal, arguing that proof of the goods' use was submitted to the original authority. They contended that the goods were wrongly classified as capital goods due to a procedural lapse. The Tribunal considered the submissions and found that the original authority correctly identified the usage of the goods for maintenance, rejecting the Commissioner's decision.

3. The appellant reiterated their argument regarding the use of the impugned goods for maintenance in the appeal. The Departmental Representative objected to entertaining the appeal due to the duty amount involved being less than ?50,000. However, the Tribunal decided to consider the appeal. The Tribunal referred to a previous ruling where credit was denied when the use of inputs for maintenance couldn't be proven. In this case, the Tribunal found that the goods, though initially treated as capital goods, were substantively eligible to be inputs and were used for maintenance, supporting the original authority's decision.

4. The Tribunal examined the provisions of the Central Excise Act, 1944, regarding the appeal's admission based on the duty amount involved. Despite the objection raised, the Tribunal chose to entertain the appeal and proceeded to analyze the substantive eligibility of the goods as inputs for maintenance, ultimately upholding the original authority's decision.

5. The Tribunal interpreted the definition of Capital Goods under the Cenvat Credit Rules 2004, emphasizing that mere mention in the books of account did not change the substantive eligibility of the goods as inputs. By reviewing the material requisition slips and confirming the usage of the goods for maintenance and repair of machinery, the Tribunal concluded that the Commissioner's observations were not sustainable. Consequently, the Tribunal set aside the Order-in-Appeal and upheld the Order-in-Original, allowing the appeal with any consequential relief.