2016 (11) TMI 1098 - AT - Central Excise

Denial of CENVAT credit - MS Angles, Channels, Plates, Rounds, HR Sheets etc - neither inputs nor capital goods - Held that - the above items are not supporting structures of Plant & Machinery or for laying foundation and hence the findings of the adjudicating authority that, these are not goods being embedded to the earth are in the nature of immovable goods and are not goods or excisable goods in terms of CBEC Circular No. 58/1/2002-CX dated 15/01/2002 is not proper. From the Cenvat credit details, I find that, they have availed Cenvat credit amounting to ₹ 30,32,830/- on account of various structural steel items used for manufacture of Hopper, Kiln, Kiln inlet house, Conveyor System, etc. for Sponge Iron and accordingly, they are entitled for Cenvat credit amount to ₹ 30,32,830/- availed on various structural steel items Whether the goods are inputs or not? - Held that - These goods are more in the nature plant/ machinery embedded to earth or supporting structures rendering assistance in the manufacture of finished goods. Reliance was placed on the Tribunal s decision in Vandana Global Ltd. vs. CCE, Raipur 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) . It was further contended that the respondent never engaged the fabrication of various capital goods as claimed in their monthly returns. No accounts were maintained. These structural items are capable of being used in construction of shades etc. The Revenue argued that the certificate given by Chartered Engineer is not adequate to support the claim of the respondent for credit. Appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against disallowance of Cenvat credit on steel items used in manufacturing Sponge Iron.

Analysis:
The case involved an appeal by the Revenue against the disallowance of Cenvat credit amounting to ?30,32,830 on steel items like MS Angles, Channels, Plates, Rounds, HR Sheets used in the manufacturing of Sponge Iron. The Revenue contended that these items were not directly or indirectly connected with the manufacture of finished goods and were more akin to plant/machinery or supporting structures. They argued that the respondent did not engage in the fabrication of various capital goods as claimed and lacked proper documentation. The Revenue also questioned the adequacy of the Chartered Engineer's certificate provided by the respondent.

Upon examination, the Tribunal found that the respondent had furnished documentary evidence, including Chartered Engineer's certificates, showing that the steel items were used in the manufacture of capital goods like Hopper, Kiln, Conveyor System, etc., which were essential for the manufacturing process of Sponge Iron. The Tribunal noted that these items were parts or components of the Sponge Iron Unit, falling within the definition of capital goods under the Cenvat Credit Rules, 2004. The Tribunal disagreed with the Revenue's argument that the items were immovable goods and not eligible for credit, citing relevant case laws and the user test principle established by the Supreme Court.

The Tribunal's decision was supported by various previous judgments by the Tribunal, High Courts, and the Supreme Court, including the decision in Madras Cements Ltd. vs. CCE. The Tribunal emphasized the consistent application of the user test principle in similar cases involving steel items used in manufacturing processes. Referring to recent Tribunal decisions in other cases, the Tribunal highlighted the allowance of credit on similar items used in the fabrication of capital goods/accessories, reinforcing the precedent set in previous cases.

Ultimately, the Tribunal dismissed the Revenue's appeal, upholding the findings of the impugned order that the steel items were integral to the manufacturing process of Sponge Iron and eligible for Cenvat credit. The decision was based on a thorough analysis of the evidence presented and in alignment with established legal principles and precedents.

(Order pronounced in open court on 09/11/2016)