2017 (6) TMI 158 - AT - Central Excise

CENVAT credit - Iron & Steel items like M.S. Angle, Channels, Joist, Beams, Bar etc., - denial on the ground that these items are neither used in the manufacture of final products nor were used for manufacture of capital goods - Held that - the verification report of the Superintendent of Central Excise states that the items in question were used in the plant & machinery as reactor systems, Re-actor cooling system etc.. It is categorically stated that these plant & machinery are movable in nature in view of its installation can easily be separated - these items were used for functioning of the machines - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
- Availing Cenvat Credit on Iron & Steel items
- Definition of capital goods under Cenvat Credit Rules, 2004
- Verification report by Central Excise officers
- Impact of Notification No.16/2009-CE(NT) dated 07.07.2009
- Interpretation of Tribunal and Court decisions on similar issues

Availing Cenvat Credit on Iron & Steel items:
The case involved a dispute regarding the availing of Cenvat Credit on various Iron & Steel items like M.S. Angle, Channels, Joist, Beams, Bar by the respondent. The Adjudicating Authority disallowed the credit, but the Commissioner(Appeals) set aside the order based on a verification report of the jurisdictional Superintendent of Central Excise. The report confirmed the usage of these items in the manufacture of capital goods, leading to the conclusion that the credit was correctly availed.

Definition of capital goods under Cenvat Credit Rules, 2004:
The Adjudicating Authority argued that the items were used in civil construction and did not qualify as capital goods under the Rules. However, the Commissioner(Appeals) relied on the verification report, which stated that the items were used in movable machineries like Reactor System, Reactor Cooling System, After Burning Chamber, and Day Bin (RMHS), making them capital goods as defined in the rules. This interpretation supported the respondent's claim of correctly availing the credit.

Verification report by Central Excise officers:
The verification report by the jurisdictional Superintendent of Central Excise played a crucial role in determining the eligibility of the items for Cenvat Credit. The report confirmed the usage of the Iron & Steel items in the manufacture of movable machineries, which were considered capital goods under the Cenvat Credit Rules, 2004. This report was a key factor in the Commissioner(Appeals) overturning the Adjudication order.

Impact of Notification No.16/2009-CE(NT) dated 07.07.2009:
The Notification amended Rule 2(k) of the Cenvat Credit Rules, 2004, restricting credit on certain items used for construction purposes. However, the period of dispute in this case predated the introduction of the Notification. Moreover, the verification report confirmed that the items in question were used in plant & machinery, which were movable in nature and not fixed structures, making the Notification inapplicable to the present case.

Interpretation of Tribunal and Court decisions on similar issues:
Various decisions were cited in favor of the assessee, supporting the correct availing of credit on Iron & Steel items used in the manufacture of capital goods. The Tribunal and Court decisions highlighted the importance of factual verification and the operational nature of the machinery in determining the eligibility for Cenvat Credit. The judgment emphasized the need to consider the functional usage of the items rather than their physical installation for determining credit eligibility.

In conclusion, the appeal filed by the Revenue was dismissed, upholding the Commissioner(Appeals)'s decision based on the verification report and consistent interpretation of relevant legal provisions and precedents.

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