2017 (8) TMI 882 - HC - Central Excise

CENVAT credit - whether items like Steel Plates, Angles, Channel, Joists, TMT flat bars, Tor Steels, MS Flats, Packing, Jointing Sheet, Steam Metallic Packing, Jointing, Gasket Sheet, Aluminium Sheet, Bagasse Carrier Chain, Forged Chain and Welding Electrodes are eligible for Cenvat credit as capital goods or inputs? - Held that - The question how an item can be considered as Input or Capital Goods , has been dealt with in a catena of decisions by Supreme Court, various High Courts and Tribunals. The matter ought to have been considered appropriately covering all the items which has not been done by Tribunal. The order of Tribunal, in our view, cannot be said to be a judgment since nothing has been discussed and in a very cursory manner, appeal of Revenue has been dismissed - Matter is remanded to Tribunal to decide the appeal on merits, afresh - appeal allowed by way of remand.

Summary

Issues involved:
1. Eligibility of various items for Cenvat credit as capital goods or inputs under the Central Excise Act, 1944.
2. Justification of the Tribunal's decision and the requirement of a reasoned judgment.

Analysis:

Issue 1: Eligibility for Cenvat credit
The appeal under Section 35G of the Central Excise Act, 1944, arose from a judgment of the Customs, Excise and Service Tax Appellate Tribunal. The main issue was whether items like Steel Plates, Angles, Channel, Joists, TMT flat bars, Tor Steels, MS Flats, Packing, Jointing Sheet, Steam Metallic Packing, Jointing Gasket Sheet, Aluminium Sheet, Bagasse Carrier Chain, Forged Chain, and Welding Electrodes are eligible for Cenvat credit as capital goods or inputs. The Tribunal's order was criticized for being unspeaking and unreasoned. The Court formulated a substantial question of law regarding the Tribunal's justification in deciding the issue based on previous judgments and whether the order met the requirements of a reasoned judgment.

Issue 2: Tribunal's decision and reasoning
The Tribunal's decision was found to be lacking in depth and reasoning. While the Tribunal referred to judgments related to welding electrodes from different High Courts, it failed to consider the eligibility of other items for Cenvat credit. The Court noted the casual and cursory approach taken by the Tribunal in dismissing the Revenue's appeal without adequately addressing the questions raised regarding various items. The Court emphasized that the Tribunal's order did not meet the standards of a proper judgment as it did not discuss the matter thoroughly. The Court highlighted that the determination of whether an item qualifies as an 'Input' or 'Capital Goods' has been extensively addressed in decisions by the Supreme Court, various High Courts, and Tribunals, which the Tribunal failed to consider. Consequently, the Court set aside the Tribunal's order and remanded the matter for a fresh decision on the merits.

In conclusion, the High Court allowed the appeal, setting aside the Tribunal's order and remanding the case for a reevaluation on the merits. The Court emphasized the importance of providing a reasoned judgment and thoroughly considering all relevant items in determining their eligibility for Cenvat credit under the Central Excise Act, 1944.