2016 (12) TMI 718 - AT - Central Excise

Admissibility of credit availed on MS Angles, Plates, Channels etc - Held that - It is observed that the subject items were mainly used by appellant for fabrication of structure used as basement for the capital good and for laying pipe lines. The original authority has entered into the conclusion that these cannot be considered as component/spare/accessorises to capital goods. On perusal of the month wise details of the credit availed it is seen that the appellant has not availed credit in the month of June and July, 2009. The period as per the invoices is seen to be prior to 07-07-2009 - In India Cements Ltd Vs CCE, Chennai 2015 (3) TMI 661 - MADRAS HIGH COURT , the Hon ble High Court of Madras held that credit availed on MS items used for fabricating structural support is eligible, as without such support of the machines cannot be used without vibration and manufacturing process cannot be carried out - credit allowed - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
Admissibility of credit availed on MS Angled, Plates, Channels as capital goods.

Analysis:
The case involves the admissibility of credit on MS Angled, Plates, Channels, etc., as capital goods by a manufacturer of bulk drugs. A show cause notice was issued alleging irregular availment of credit on these items, and the demand was confirmed by the adjudicating authority and upheld by the Commissioner (Appeals). The appellant argued that the subject items were used in constructing pipelines and bridges to connect solvent yards to reactors, providing structural support without which the machines could not function. The appellant also highlighted that the credit was availed before a specific date. The Department contended that the subject items did not fall under the definition of capital goods, justifying the denial of credit.

Upon hearing the submissions, the tribunal noted that the subject items were mainly used for fabricating structures as basements for capital goods and laying pipelines. It was observed that without such structural support, the machines could not function properly. Referring to precedents, the tribunal cited a case where the High Court held that credit on MS items used for fabricating structural support is eligible. The tribunal also mentioned a case where it was held that MS Angle, Plates, etc., used for fabricating capital goods are eligible for credit. The tribunal concluded that the demand was unsustainable based on the decisions cited, setting aside the impugned order and allowing the appeal with consequential reliefs.

In conclusion, the tribunal held that the demand for credit on MS Angled, Plates, Channels, etc., as capital goods was unsustainable based on the usage of these items for providing structural support to capital goods, as established by previous judgments and legal precedents.