2021 (12) TMI 955 - AT - Central Excise

CENVAT Credit - input - paint - erection, commissioning and installation was done by their Delhi office but tower and paints were supplied by the appellant at site - HELD THAT - It is a fact on record that the paint which has been procured by the appellant have been supplied alongwith tower and the value of the paint has been included in the value of tower on which duty has been paid. In that circumstances, relying on the decision of AJRI ENGINEERING INDUSTRIES PVT LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-II 2014 (3) TMI 833 - CESTAT MUMBAI , where it was held that the appellant is entitled to take cenvat credit on the paint. Further, I hold that the paint is essential for safeguard of tower; therefore, it is an accessory which do qualify as input in terms of Rule 2(k) of Cenvat Credit Rules, 2004. CENVAT Credit allowed on paints - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of cenvat credit on paint supplied along with tower for erection, commissioning, and installation.

Analysis:
The appellant, a supplier of towers to telecommunication companies, had a work contract for erection, commissioning, and installation of towers at site, with painting done by their Delhi office. The revenue contended that since the painting was done by the Delhi office and not by the appellant, cenvat credit on the paint should be denied. A show cause notice alleged that paint was neither a raw material nor used in manufacturing by the appellant, thus cenvat credit was not permissible. The matter was adjudicated, leading to confirmation of demand for denial of cenvat credit on paint, along with interest and penalty. The appellant challenged this order.

The appellant argued that paint was essential for safeguarding the tower from rust and qualified as an accessory under Rule 2(k) of the Cenvat Credit Rules, 2004. They had purchased the paint and supplied it along with the tower at the site, paying duty on the entire value. Citing precedents, including the case of Ajri Engineering Industries Pvt. Ltd. vs. Commissioner of Central Excise, Pune-II, the appellant claimed entitlement to cenvat credit. The appellant also referenced the decision of Commissioner of Central Excise, Nagpur vs. KEC International Ltd.

On the contrary, the Authorized Representative (AR) supported the findings of the impugned order, emphasizing that the paint was not part of the appellant's manufacturing activity and was used by the Delhi office for painting the towers, a service provided by that office. After hearing both parties and considering their submissions, it was noted that the paint procured by the appellant was supplied along with the tower, with the paint's value included in the tower's value on which duty was paid. Relying on the decision in Ajri Engineering Industries Pvt. Ltd., it was held that the appellant was entitled to cenvat credit on the paint, considering it essential for safeguarding the tower, thus qualifying as an input under Rule 2(k) of the Cenvat Credit Rules, 2004.

Consequently, the cenvat credit on paints was allowed to the appellant, and the impugned order was set aside. The appeal was allowed with any consequential relief deemed necessary.