2017 (1) TMI 17 - AT - Central Excise

Cement - CENVAT credit - MS plates, MS angles, channels, steel tubes, rebars, pastable items, ceramic tiles etc - Held that - The Chartered Engineer certificate certifies that the capital goods manufactured using the subject items are essential for carrying out manufacturing activity of the appellant - When the appellant uses railway sidings for the purpose of transportation, it has to be invariably laid outside the factory and connected to a railway station in order to facilitate the transportation of bulk quantities of inputs and final products. Needless to say that the railway sidings laid outside the factory are part and parcel of the facility for transportation provided inside the factory premises - the appellant is eligible for credit availed on MS items, angles etc. Credit in tiles - Held that - The credit availed on tiles i.e. ₹ 13,076/- is disallowed and the same along with interest as well as equal amount of penalty to this amount of ₹ 13,076/- is confirmed. Appeal disposed off - decided partly in favor of assessee.

Summary

Issues:
- Availing irregular credit on various items
- Eligibility of credit on MS items, angles, etc.
- Eligibility of credit on railway sidings
- Admissibility of credit on ceramic tiles

Analysis:
1. The case involved the appellants, engaged in cement manufacturing, availing CENVAT credit on various items. The Department observed irregular credit availed on items like MS plates, angles, channels, steel tubes, etc. A show-cause notice was issued for recovery of credit and penalties. The original authority confirmed the demand, interest, penalties, and imposed a redemption fine. The appellants approached the Tribunal challenging this decision.

2. The appellant's counsel argued that the items in question were used for fabrication of capital goods and provided a Chartered Engineer's certificate to support this claim. The items were used for various purposes within the factory, including silo erection, stockpile, cement mills, and railway sidings. The appellant cited several judgments to support their contention that credit on these items used for fabrication of capital goods is eligible.

3. The Department reiterated the findings of the impugned order, emphasizing that railway sidings laid outside the factory are not eligible for credit.

4. Upon review, it was found that the subject items were indeed used for capital goods integral to the manufacturing process. The Chartered Engineer certificate confirmed the essential nature of these items for manufacturing activities. The Department's objection regarding credit on railway sidings outside the factory was addressed by highlighting their necessity for transportation of goods.

5. Citing precedents, it was established that items like railway sidings laid outside the factory can be considered part of the facility for transportation inside the factory premises. The Tribunal's decisions in similar cases supported the admissibility of credit on such items crucial for manufacturing activities.

6. Considering the arguments and precedents, the Tribunal held that the credit availed on railway sidings was eligible. However, the credit on ceramic tiles was deemed inadmissible and disallowed.

7. In conclusion, the Tribunal allowed the appeal partially, permitting credit on MS items and angles while disallowing credit on tiles. The decision highlighted the importance of railway sidings for transportation and upheld the eligibility of credit on such items integral to the manufacturing process.