2021 (8) TMI 644 - AT - Central Excise

CENVAT Credit - inputs/capital goods - Welding Electrode - Railway Line material - credit denied on the ground that some of the input/ capital goods were not used in or in relation to manufacture of final product and as regard the railway line material, since these were used and situated outside the factory premises cenvat credit was disallowed - HELD THAT - All the goods have been used in or in relation to manufacture of the final product directly or indirectly. MS Gratings were used as an essential accessory for supporting and holding and for approaching or reaching out plants/ processing units of refinery in which raw material is processed for manufacture of petroleum products. Looking to the nature of the industry, it is a technological necessity without which the processing unit cannot perform. Welding material - HELD THAT - The welding material is used for repairs and maintenance of the plants and machinery, the repair and maintenance activities are essential for smooth manufacturing operations without which manufacturing activity is not feasible, therefore, the cenvat credit is clearly admissible. Railway line material - HELD THAT - Railway line material is used to move inputs/ raw material and manufactured goods within the factory premises. The movement of goods through railway track is directly connected to the manufacture of final product, therefore, the credit cannot be denied on these items. On every item, this Tribunal has considered the admissibility of the cenvat credit and in various judgements, it was held that the credit is admissible on the goods in question. Therefore, following the precedent decisions of this Tribunal and various courts, the appellant is entitled for the cenvat credit on the said goods - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Entitlement to cenvat credit for specific inputs and capital goods.

Analysis:
1. Issue of Cenvat Credit Eligibility: The appeal challenged the denial of cenvat credit for various inputs and capital goods by the Commissioner of Central Excise. The Commissioner held that some items were not used in or in relation to the manufacture of the final product, while railway line materials were disallowed due to being situated outside the factory premises. The appellant contended that all goods were indeed utilized in the manufacturing process. The appellant's representative argued that the denial of credit was based on the late submission of information, which was actually provided to the Jurisdictional Superintendent beforehand. The appellant emphasized that the goods in question were crucial for manufacturing operations.

2. Arguments and Findings: The appellant's counsel cited previous Tribunal judgments where cenvat credit for similar items was deemed admissible. The Superintendent representing the Revenue reiterated the findings of the impugned order. Upon review, the Tribunal found that all the goods were directly or indirectly used in the manufacturing process. For instance, MS Gratings were deemed essential for supporting and accessing processing units in the refinery, crucial for manufacturing petroleum products. Welding materials were utilized for repairs and maintenance, vital for smooth manufacturing operations. Railway line materials facilitated the movement of goods within the factory premises, directly linked to the manufacturing process.

3. Precedent Decisions: The Tribunal referenced multiple judgments where cenvat credit on similar items was allowed. The appellant provided a detailed chart listing relevant case laws supporting the admissibility of cenvat credit for capital goods, welding electrodes, and railway line materials. Based on the precedent decisions of the Tribunal and various courts, the Tribunal concluded that the appellant was entitled to cenvat credit on the disputed goods. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

This detailed analysis of the judgment showcases the legal arguments presented, the findings of the Tribunal, and the reliance on precedent decisions to determine the entitlement to cenvat credit for specific inputs and capital goods.