2017 (2) TMI 528 - AT - Central Excise

CENVAT credit - MS items - Held that - the MS items were used for fabrication of capital goods such as Hopper equipments Electro Static Precipitator Belt Conveyor unit Kiln Cooler Assembly etc. it is made out from the documents as well as photographs produced by the appellant that the MS items have been used for fabrication of capital goods/parts/components - appellants are eligible for credit - appeal allowed - decided in favor of appellant.

Summary

Issues: Disallowance of credit on MS items.

Analysis:
The appeal was filed against the disallowance of credit on MS items by the appellants engaged in the manufacture of Sponge Iron. The appellant availed credit on various MS items like HR coils, MS plates, MS angles, MS channels, and MS beams, considering them as both capital goods and inputs. A Show Cause Notice was issued, leading to the original authority confirming the demand, interest, and penalty. The appellant then appealed before the Commissioner (Appeals), who upheld the decision, resulting in the current appeal.

The appellant's counsel argued that the MS items were used for fabricating capital goods such as Hoppers equipment, Electro Static Precipitator, Stock Beams, Product House Hopper, Belt Conveyor unit, Kiln Cooler Assembly, etc. The counsel contended that since the MS items were used for fabricating capital goods, the credit should have been allowed. The denial of credit was based on a previous decision and the argument that MS items did not qualify as capital goods or inputs. The counsel cited various decisions, including a recent one by the Tribunal in the case of M/s. Ultratech Cement Ltd Vs CCE, Jaipur, and other relevant judgments to support the appellant's claim.

On the other hand, the Commissioner (Appeals) reiterated the findings of the impugned order, stating that the MS items did not meet the definition of capital goods or inputs. It was argued that once the capital goods were fixed to the earth after fabrication, they lost their character as capital goods and became capital assets, referencing a previous case law.

After considering the arguments from both sides and examining the records, the Tribunal found that the MS items were indeed used for fabricating capital goods like Hopper equipments, Electro Static Precipitator, Belt Conveyor unit, Kiln Cooler Assembly, etc. Based on the evidence provided by the appellant, including documents and photographs, it was established that the MS items were utilized for fabricating capital goods/parts/components. Consequently, following the decisions cited by the appellant, the Tribunal held that the appellants were eligible for credit. The impugned order disallowing the credit was set aside, and the appeal was allowed with any consequential reliefs.