2016 (11) TMI 1326 - AT - Central Excise

CENVAT credit on items like on items like channel, plates, copper/aluminum PVC cable, shape and section, gasket etc - manufacturer of sugar and molasses - pollution control equipments - use of bio-gas in manufacture - Held that - there is no dispute of the appellant having fabricated the biogas plant which is admittedly pollution control equipment. Further, the gas emerging from the biogas plant is also utilized in manufacture of excisable goods. Accordingly, we hold that the appellant is eligible for Cenvat credit for the inputs utilized by them in the manufacture of biogas plant. Accordingly appeal number 2471/2007 is allowed with consequential benefits, if any. In view of the change in the provisions of Cenvat credit and now the credit being available on all the items utilized in the factory of production, we hold that the appellant is entitled to Cenvat credit on all the items in question including welding electrodes. We have been informed that the issue of Cenvat credit on welding electrodes utilized for the purpose of repair and maintenance is pending consideration before Hon ble Apex Court, but no stay have been granted of the orders of the Tribunals and High Courts wherein credit have been allowed. As we have allowed credit on welding electrodes in several other appeals before this tribunal, for the sake of consistency we allow credit in this appeal also. This appeal is allowed with consequent benefits, if any, to the assessee

Summary

Issues:
1. Disallowance of Cenvat credit on pollution control equipment.
2. Disallowance of Cenvat credit on items like welding electrodes, plates, winding wire, etc., treated as capital goods.

Analysis:

Issue 1: Disallowance of Cenvat credit on pollution control equipment
The appellants, manufacturers of sugar and molasses, appealed against an Order-in-Appeal alleging inadmissible credit availed on certain items. The dispute arose as the authority disallowed the credit on pollution control equipment, considering it not directly related to the manufacture of excisable goods. The appellants argued that as per the policy, they procured the goods for a biogas plant used in treating distillery effluents, which was integral to their manufacturing process. They contended that pollution control equipment fell under the definition of capital goods and thus, credit should be allowed. The Tribunal acknowledged that the biogas plant was pollution control equipment and its output was used in manufacturing excisable goods. Consequently, the Tribunal allowed the appeal, granting Cenvat credit on the inputs utilized for the biogas plant.

Issue 2: Disallowance of Cenvat credit on specific items
In another appeal, the appellants contested the disallowance of Cenvat credit on items like welding electrodes, plates, winding wire, etc., treated as capital goods. They argued that these items were used for repair, maintenance, and fabrication of machinery within the factory premises. The Tribunal noted the changes in Cenvat credit provisions, allowing credit on all items utilized in production. Considering the issue of Cenvat credit on welding electrodes pending before the Apex Court, the Tribunal decided to grant credit on welding electrodes in line with previous decisions for consistency. Therefore, the Tribunal allowed the appeal, permitting Cenvat credit on all items in question, including welding electrodes, for repair and maintenance purposes.

In conclusion, the Tribunal ruled in favor of the appellants in both appeals, allowing Cenvat credit on pollution control equipment and various items used in the factory premises, including welding electrodes, plates, winding wire, etc., for repair and maintenance activities.