2017 (5) TMI 47 - AT - Central Excise

CENVAT credit - ineligible inputs/capital goods in terms of Rule 2(k) and 2(a)(A)(i) to (vii) of the CCR, 2004 - MS mill plates, MS channel, MS angle, HR steel plates, chequered plates, aluminium coil, joists - whether the CENVAT credit is allowable on various structural items such as MS Plates, MS Channel, MS Angle, HR Steel Plates, Chequered Plates, Aluminium Coil, Joists, etc., which were used for making structure for supporting capital goods? - Held that - the Hon ble High Court of Madras in the case of Alfred Albert India Ltd. 2010 (4) TMI 424 - KARNATAKA HIGH COURT held that the inputs used for repair and maintenance of plant and machinery is eligible for credit - the Hon ble Supreme Court in the case of CCE vs. India Cement 2011 (8) TMI 399 - MADRAS HIGH COURT held that steel plates and MS channels used in the fabrication of channels would fall within the ambit of capital goods - credit allowed - decided in favor of assessee.

Summary

Issues:
Appeal against Commissioner (A)'s orders disallowing CENVAT credit on structural items used for supporting capital goods.

Analysis:
The appellant, engaged in manufacturing sugar and related products, availed CENVAT credit on various items used for cladding boilers and equipment maintenance. The Department alleged these items were ineligible inputs/capital goods under CENVAT Credit Rules, leading to a penalty. The Commissioner (A) disallowed part of the credit and imposed a penalty. The appellant appealed, arguing the denial of credit was contrary to statutes and judicial precedents. The Technical Adviser's certificate supported the items' integral use in machinery. The AR cited a Supreme Court decision to defend the impugned orders.

The core issue revolved around the eligibility of CENVAT credit on structural items like MS Plates, HR Steel Plates, etc., used for supporting capital goods. The definition of "input" and "capital goods" under CENVAT Credit Rules was crucial. Citing various judicial decisions, the appellant contended the items qualified as capital goods. Notably, the Tribunal's decision in SKS Ispat and Power Ltd. case and the Karnataka High Court's ruling in Alfred Albert India Ltd. supported the appellant's argument. The Tribunal's decision in APP Mils Pvt. Ltd. case also favored allowing credit for such structural items.

After considering submissions and precedents, the judge concluded the impugned orders were unsustainable in law. Relying on the cited decisions, the judge set aside the orders and allowed the appeals of the appellant. The judgment was pronounced on 24.04.2017 by S. S. Garg, Judicial Member at the Appellate Tribunal CESTAT Bangalore.