Tribunal allows Cenvat credit on MS items used in capital goods for cement plant

The Tribunal overturned the denial of Cenvat credit on MS angles, channels, plates, etc., used in fabricating capital goods for a cement plant. Despite lacking specific documentation in ER-1 returns, the appellant provided evidence of usage for expansion projects. The Tribunal held that the denial was unjustified, aligning with precedents allowing credit for MS items used in capital goods fabrication/erection. The appeal was allowed, setting aside the denial of credit and providing consequential reliefs.

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Issues:
Denial of Cenvat credit on duty paid for MS angles, channels, plates, etc.

Analysis:
The appellant, engaged in cement manufacturing, availed Cenvat credit on structural items like MS angles, channels, plates, etc. A show cause notice was issued disallowing the credit on these items. The adjudicating authority confirmed the denial, which was upheld by the Commissioner (Appeals), leading the appellant to appeal before the Tribunal.

The appellant argued that the items were used for the expansion project to build new machines and capital goods. They provided invoices, purchase orders, and usage details as evidence. The Commissioner (Appeals) acknowledged that credit was admissible if the items were used for capital goods but denied it due to lack of specific documentation and disclosure in ER-1 returns.

The respondent referred to a Larger Bench decision stating that cement and steel items for support structures do not qualify as inputs or capital goods. They argued that even though the period predated a rule change, the credit was inadmissible.

The Tribunal noted that the items were used in fabricating capital goods for the cement plant, supported by statements and issue slips. The absence of a provision in ER-1 returns for detailed usage was considered. Citing precedents, the Tribunal held that the denial of credit was unjustified, overturning the impugned order and allowing the appeal with consequential reliefs.

The Tribunal highlighted judgments supporting the admissibility of credit on MS items used for capital goods fabrication/erection. It differentiated from the Larger Bench decision, emphasizing that the rule change had a prospective effect. The appellant's case was aligned with these precedents, leading to the allowance of the appeal and setting aside the denial of credit.

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