2017 (7) TMI 400 - AT - Central Excise

CENVAT credit - M.S. Rounds Structure Parts Shrinkomp G.I. Structures etc - Explanation to Rule 2(k) of CCR - Held that - the items in dispute are either components of capital goods or inputs which have been used in manufacture of capital goods which are further used in the factory of the appellant for manufacture of dutiable goods like sugar and molasses etc - the appellant is entitled to CENVAT Credit on the items in dispute - appeal allowed - credit allowed - decided in favor of appellant.

Summary

Issues:
Allowability of Cenvat Credit on items like M.S. Rounds, Structure Parts, Shrinkomp, G.I. Structures, etc.

Analysis:
The appellant, a sugar factory, availed Cenvat Credit on various items. A show cause notice objected to the credit taken during May 2008 on items like Cable Tray, M.S. Rounds, Foundation Bolt, Structure Parts, etc., proposing interest and penalty. The Assistant Commissioner's Order-in-Original allowed credit on some items but disallowed credit on others, imposing penalties. The Commissioner (Appeals) partially allowed the appeal, setting aside the penalty on the company but not on the employee. The appellant and the employee appealed to the Tribunal, arguing that the Commissioner made factual errors. The appellant explained the specific use of each item in dispute before the Tribunal.

For M.S. Rounds, the items were actually Globe valve, Round, and S.S. Pipe, used in the Boiling Section for sugar cane juice boiling. Shrinkomp is a chemical applied on steam pipe lines to reduce heat loss. Structure Parts like Foundation Bolt support machinery, especially 170 TPH Boilers. G.I. Structures are essential for the Turbine's exhaust pipe line, and Unalloyed Cold Rolled Coil insulates steel pipe lines of the boiler. The appellant argued that these items are components or accessories of capital goods or inputs used in manufacturing dutiable goods like sugar and molasses.

The appellant relied on the Explanation to Rule 2(k) of CCR, stating that inputs include goods used in manufacturing capital goods further used in the factory. Capital Goods include components, spares, and accessories of capital goods. The Revenue's AR supported the impugned order. The Tribunal, after considering the contentions, held that the disputed items are either components of capital goods or inputs used in manufacturing capital goods for dutiable goods like sugar and molasses. Thus, the appellant is entitled to Cenvat Credit on the items in dispute and set aside the penalty on the employee.

In conclusion, the Tribunal allowed the appeals, permitting Cenvat Credit on the disputed items and overturning the penalty on the employee.