2017 (11) TMI 431 - AT - Central Excise

CENVAT credit - HR plates, MS angles, GC sheets, joists etc. used for fabrication of workshop shed and erection of structural items - denial on the ground that these are neither inputs nor capital goods - Held that - in the SCN, the Department has recorded the statement of Managing Director of the appellant who has stated that MS angles, HR plates, GC sheets, joists etc. are used for fabrication of various components namely Furnace shell, electrodes mantle, pressure rings, conveyor galleries / supports, raw material hoppers etc. by treating as components. In view of the statement of the Managing Director and finding in the impugned order that appellant has failed to establish usage of the items in the factory - this case needs to be remanded back to the original authority to verify the actual usage of the impugned goods in the fabrication of various items as alleged by the appellant - appeal allowed by way of remand.

Summary

Issues:
- Appeal against rejection of cenvat credit on certain items used for fabrication of structures.
- Allegation of irregular credit availed on items not classified as inputs or capital goods.
- Failure to produce documents proving actual usage of impugned goods.
- Discrepancy between show-cause notice and impugned order.
- Legal precedent supporting appellant's claim.
- Disagreement on whether capital goods becoming immovable items is relevant.
- Settlement of issue regarding availment of credit on iron and steel items.

Analysis:
The appeal was directed against the rejection of cenvat credit on items used for fabrication of structures. The appellants, engaged in manufacturing High Carbon Ferro Manganese, availed cenvat credit on HR plates, MS angles, GC sheets, joists, etc., used in the fabrication of workshop shed and structural items. The lower authority held the credit irregular as these items were not classified as inputs or capital goods. The Commissioner(Appeals) rejected the appeal, citing the appellant's failure to produce documents proving the actual usage of the impugned goods, leading to the present appeal.

The appellant argued that the impugned order was unsustainable as it deviated from the show-cause notice and binding judicial precedents. They contended that the denial of credit based on non-production of documents was not raised in the notice. The appellant relied on various decisions supporting their position regarding the eligibility of credit on immovable items and the necessity to establish usage before items become part of immovable goods. Additionally, they cited settled cases on the issue of credit availment on iron and steel items used for capital goods or structural support.

On the other hand, the respondent defended the impugned order, asserting that the credit denial was justified due to the appellant's failure to prove the actual usage of the goods. After hearing both parties and reviewing the evidence, the Tribunal found that the rejection of the appeal was mainly due to the appellant's inability to establish the usage of the impugned goods. The case was remanded back to the original authority for verification of actual usage, allowing the appellant to produce evidence, including a certificate from a Chartered Engineer. The original authority was directed to pass a reasoned order within three months, following the principles of natural justice.

In conclusion, the Tribunal allowed the appeal by remanding the case for further verification of the actual usage of the impugned goods, emphasizing the importance of producing necessary evidence to support the credit availed on the items in question.