2022 (10) TMI 513 - AT - Central Excise

CENVAT Credit - inputs - HR Sheets, HR Plates and MS Rods used for fabrication of Steel Formers which is in the nature of a consumable in the Appellant s induction furnace - HELD THAT - The Show Cause Notice does not dispute the usage of the impugned goods. It is not in dispute that the impugned goods are used for manufacture of Steel Formers which is used as the liner of the Appellant s induction furnace and such Steel Formers get consumed in the process of the Appellant s manufacturing process - However, in the present case, Cenvat credit in respect of the impugned goods has been denied on the ground that Steel Formers fall under Chapter 73 of the Central Excise Tariff Act, 1985 . Upto 31.03.2011, the definition of input covered all goods except diesel and petrol used in relation to the manufacture of the final products whether directly or indirectly and whether contained in the final products or not and included various other goods such as lubricating oil, coolant etc. With effect from 01.04.2011, the definition of input was amended to mean inter alia, as all goods used in the factory by the manufacturer of the final product , unless specifically excluded - In the present case, the authorities below have categorically admitted that the impugned goods are used in the fabrication of Steel Former, which undisputedly gets consumed in the process of the Appellant s manufacturing of finished goods. Since the functional usage of the metal casing in Eastern Electro Chemicals Industries 2005 (2) TMI 132 - SUPREME COURT and also MS Round in the case of Sova Ispat Alloys 2012 (9) TMI 603 - CESTAT, KOLKATA is almost identical to the Steel Formers in the present case, the ratio of the aforesaid decisions are squarely applicable to the Appellant s case at hand. Appeal allowed.

Summary

Issues:
1. Admissibility of Cenvat credit on HR Sheets, HR Plates, and MS Rods.

Analysis:
1. The Appellant, engaged in manufacturing Sponge Iron and MS Billet, faced a dispute regarding the admissibility of Cenvat credit on HR Sheets, HR Plates, and MS Rods used for fabrication of Steel Formers in their induction furnace. The authorities alleged that the Appellant deliberately withheld information and wrongly availed credit, leading to a Show Cause Notice proposing disallowance of Cenvat Credit, along with interest and penalty. The Adjudicating authority upheld the disallowance, which was further affirmed by the Ld. Commissioner (Appeals), prompting the Appellant to appeal before the Tribunal.

2. The core issue revolved around whether the impugned goods, namely HR Sheets, HR Plates, and MS Rods, were eligible for Cenvat credit. The Appellant argued that these items were used as inputs in the manufacturing process, specifically in the fabrication of Steel Formers essential for their induction furnace operations. The Appellant detailed the specific utilization of each item, emphasizing their direct involvement in the manufacturing process of Sponge Iron and Billets.

3. Notably, the Show Cause Notice did not contest the usage of the impugned goods but denied Cenvat credit citing that Steel Formers fell under Chapter 73 of the Central Excise Tariff Act, 1985. However, the authorities acknowledged that the impugned goods were consumed in the manufacturing process. Referring to legal precedents, including the Supreme Court's decision in Eastern Electro Chemical Industries case, which discussed the eligibility of consumed materials as raw materials, the Tribunal found merit in the Appellant's argument.

4. Drawing parallels with previous judgments like Sova Ispat Alloys Ltd., the Tribunal concluded that the functional usage of the impugned goods aligned with the concept of raw materials, making them eligible for Cenvat credit. Given the established legal position and the factual usage of the goods in the manufacturing process, the Tribunal set aside the impugned orders and allowed the Appellant's appeal, granting consequential relief.

5. In conclusion, the Tribunal's detailed analysis and reliance on legal precedents established the admissibility of Cenvat credit on HR Sheets, HR Plates, and MS Rods used in the fabrication of Steel Formers for the Appellant's induction furnace operations, ultimately ruling in favor of the Appellant and providing necessary relief.

(Order pronounced in the open court on 13 October 2022.)