2017 (6) TMI 796 - AT - Central Excise

CENVAT credit - steel and cement - whether the appellants are entitled to CENVAT credit availed on steel and cement used in the construction of storage silos and packing plant? - Held that - in the definition of capital goods as contained in Rule 2(a) of CCR, 2004 storage tank has been specifically included in the definition of capital goods - the issue is squarely covered in favor of the appellant by various decisions wherein it has been specifically held that cement and steel used in the construction of packing plant is allowable as credit as the same fall in the definition of capital goods - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Entitlement to CENVAT credit on steel and cement used in construction of storage silos and packing plant.

Analysis:
The appeal challenged an order upholding the denial of CENVAT credit on steel and cement used in constructing storage silos and packing plant. The appellant contended that the impugned order failed to consider their submissions and relied heavily on a decision and an amendment not mentioned in the show-cause notice. The appellant argued that steel and cement qualified as inputs under Rule 2(k) of CCR, 2004, and were used in manufacturing capital goods. They cited various decisions supporting their claim. Additionally, they emphasized that capital goods becoming immovable property did not affect credit eligibility. The appellant criticized the reliance on a specific decision and an amendment, asserting they were not valid law. The AR supported the impugned order, citing the amendment excluding certain items as inputs and instructions from the Board. The AR contended that silos and packing plants were not capital goods.

The Tribunal analyzed the issue of CENVAT credit entitlement on steel and cement used in constructing storage silos and packing plant. Referring to the Karnataka High Court decision and various precedents, the Tribunal held that storage tanks were capital goods under Rule 2(a) of CCR, 2004. It noted that cement and steel used in constructing packing plants fell within the definition of capital goods and were eligible for credit. The Tribunal cited a Division Bench ruling supporting credit for cement and steel used in manufacturing storage tanks. It dismissed the argument that capital goods becoming immovable property affected credit eligibility, citing relevant decisions. Ultimately, the Tribunal found in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential benefits. The decision was pronounced in open court on 24/01/2017.