2017 (1) TMI 751 - AT - Central Excise

CENVAT credit - capital goods - MS angles, channels, sheets etc., - Held that - the period involved is prior to 07/07/2009 on which date the restriction with regard to use of MS items came to be introduced in the definition of inputs. The appellants have been able to establish the use of the subject items by furnishing a Chartered Engineer certificate. So also, the Range Officer s report furnished after inspection of factory premises pursuant to the direction of the adjudicating authority also shows that the subject items were used for manufacture of capital goods / parts / components as explained by the counsel for the appellant - The issue whether the MS angles, channels etc. used for fabrication of capital goods is eligible for credit during the relevant period was analysed by the Tribunal in many cases whereby it has been held that the credit is admissible - the disallowance of credit is unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to disallowance of credit on MS angles, channels, sheets as capital goods.

Analysis:
The appeal was filed challenging the order disallowing credit on MS angles, channels, sheets, etc., categorized as capital goods. The appellant, engaged in manufacturing iron and steel ingots, billets, availed CENVAT credit on inputs and capital goods. The original authority disallowed credit on various items, leading to the present appeal. The appellant argued that the subject items were used for fabrication of capital goods, supported by a Chartered Engineer certificate and a Range Officer's report. The Commissioner (Appeals) disallowed the credit, relying on a specific case law. However, the appellant contended that similar cases have allowed such credits, citing relevant judgments.

The period involved in the case was before a specific restriction on the use of MS items as inputs. The appellant successfully demonstrated the use of subject items through a Chartered Engineer certificate and a Range Officer's report. The Tribunal had previously ruled in various cases that MS angles, channels, etc., used for fabricating capital goods are eligible for credit. Citing precedents like India Cements Ltd., Monnet Ispat and Energy Ltd., and others, the Tribunal held that the disallowance of credit was unjustified. The Tribunal also noted that a previous decision was no longer valid law post a Supreme Court ruling. Consequently, the impugned order disallowing credit was set aside, and the appeal was allowed with any necessary consequential reliefs.

This detailed analysis of the judgment showcases the legal arguments presented, the basis for disallowance of credit, and the Tribunal's reasoning for allowing the appeal. The case highlights the importance of substantiating credit claims and the significance of legal precedents in tax matters.