2016 (12) TMI 840 - AT - Central Excise

Denial of CENVAT credit - PSC sleepers, railway construction materials like fish plates, elastic rail clips, fish plates, fish bolts, nuts, lighting structures, High Mast Light, HPSV flood light fixtures, tubes and glasses - denial on the ground that these will not fall under the definition of capital goods as they were not used for producing or processing any dutiable items - Held that - these railway lines created by using these materials were exclusively used by the appellants for movement of the raw materials, processed materials, etc. in the course of manufacture of dutiable final products. The railway track is part and parcel of material handling system integrally connected with the production on movement of dutiable goods. We note that the Hon ble Supreme Court in Jayaswal Neco Ltd. 2015 (4) TMI 569 - SUPREME COURT examined similar sets of facts and allowed credit under the erstwhile Central Excise Rules, 1944. Lighting equipments, fittings and fixtures - denial on the ground that these are mounted on civil structures and become part and parcel of such civil structures - Held that - these items are classifiable under the eligible category of Chapters 84, 85 and 9405 of the Tariff and their usage has not been disputed in an industrial operations involving steel production. Admittedly, 24 hours illumination of shop floors is essential requirement and as such, the role of these High Mast Lighting Equipment has to be recognized in the process of manufacturing activity - credit allowed. Appeal allowed - credit allowed - decided in favor of assessee.

Summary

Issues:
1. Eligibility of cenvat credit on PSC sleepers and railway construction materials.
2. Admissibility of cenvat credit on lighting equipments, fittings, and fixtures.

Analysis:

Issue 1: Eligibility of cenvat credit on PSC sleepers and railway construction materials:
The appeal challenged the Commissioner of Central Excise's order denying cenvat credit on PSC sleepers, fish plates, rail clips, lighting structures, and other materials used in the manufacturing process. The appellant contended that these items qualify as inputs under Rule (k) of Cenvat Credit Rules, 2004, citing legal precedents such as Jayaswal Neco Ltd. vs. CCE, Raipur. The Tribunal examined the use of railway track materials within the factory premises, emphasizing their integral role in material handling for production. Drawing on the Supreme Court's decision in Jayaswal Neco Ltd., the Tribunal concluded that the denial of credit was unjustified. It noted that the railway tracks were essential for the movement of raw materials and manufactured goods, aligning with the definition of goods used in manufacturing. The Tribunal referenced similar cases where credit on railway track materials was allowed, supporting its decision to overturn the impugned order.

Issue 2: Admissibility of cenvat credit on lighting equipments, fittings, and fixtures:
The dispute also revolved around the admissibility of cenvat credit on lighting equipment essential for 24-hour manufacturing operations. The appellant argued that these items fell under eligible categories in the Tariff and were crucial for steel production activities. The Tribunal acknowledged the necessity of proper illumination in manufacturing processes and rejected the notion that these fittings became part of immovable property. By referencing previous rulings where credit on similar items was allowed, the Tribunal upheld the appellant's claim for cenvat credit on lighting fixtures. It emphasized the functional role of these items in facilitating continuous manufacturing operations and dismissed the contention that they should be considered part of civil structures. Consequently, the Tribunal set aside the impugned order and allowed the appeal, recognizing the legitimacy of claiming cenvat credit on lighting equipments, fittings, and fixtures.

This detailed analysis of the judgment highlights the legal arguments, precedents, and reasoning considered by the Tribunal in addressing the issues raised in the appeal.