2018 (5) TMI 535 - AT - Central Excise

CENVAT credit - SS Plates, Sheets, Coils etc. used for fabrication of various vessels and tanks which are further put to use in the factory premises - denial on account of nexus - Held that - all goods which are used in the factory by the manufacturer of final products are eligible for availment of CENVAT credit - the provisions of Rule 2(k) of CENVAT Credit Rules are very clear, the denial of CENVAT credit to appellant on SS Plates, Sheets and Coils is totally negating the spirit of CENVAT credit on the inputs used in the factory premises of the assessee. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of CENVAT credit on SS Plates, Sheets, Coils
- Definition of inputs under Rule 2(k) of the CENVAT Credit Rules, 2004

Analysis:
The appeal involved a dispute regarding the availment of CENVAT credit on SS Plates, Sheets, Coils by the appellant for the period between August 2012 to April 2013. The lower authorities had directed the appellant to reverse the CENVAT credit availed, citing that the goods were not used as inputs for the final products. The appellant argued that the goods were eligible for CENVAT credit as inputs, not capital goods, referencing Rule 2(k) of the CENVAT Credit Rules, 2004 and a CBEC clarification. The Commissioner (AR) contended that the CENVAT credit was incorrect as there was no evidence of consumption of the goods for fabrication, no production records, issue slips, or details in the ER-1 returns. The Commissioner relied on a decision of the Hon'ble High Court of Allahabad to support the denial of credit.

The Tribunal considered the submissions and found that the appellant had indeed received SS Plates, Sheets, Coils during the period and treated them as capital goods, claiming CENVAT credit for their use in manufacturing receivers and vessels. The Adjudicating Authority and the First Appellate Authority had rejected this claim. However, the Tribunal noted that the Adjudicating Authority had acknowledged the appellant's annexure detailing the usage of the goods in manufacturing receivers, which was summarily dismissed by the lower authorities without proper consideration. The Tribunal highlighted the definition of inputs under Rule 2(k) of the CENVAT Credit Rules, emphasizing that all goods used in the factory by the manufacturer of final products are eligible for CENVAT credit.

The Tribunal concluded that the denial of CENVAT credit on SS Plates, Sheets, Coils was against the spirit of the CENVAT credit rules as the goods were used in the factory premises for fabrication. Therefore, the impugned order was set aside, and the appeal was allowed with consequential reliefs, if any. The operative part of the order was pronounced in open court at the conclusion of the hearing.