Tribunal rules in favor of malt manufacturer, allowing Cenvat credit on steel items

The Tribunal allowed the appeal, ruling in favor of the appellant, a malt products manufacturer, in the dispute over Cenvat credit on steel items. The appellant's documentation and detailed usage chart supported their claim that the steel items were used for manufacturing MS trays, considered capital goods. The Tribunal found the Revenue failed to prove misuse of the items, shifting the burden of proof onto the Revenue. Consequently, the appellant was deemed eligible for the Cenvat credit, and the denial was overturned, granting the appeals with any necessary relief.

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Issues:
Appeal against denial of Cenvat credit on steel items as input/capital goods.

Analysis:
The appellant, a manufacturer of malt products, appealed against orders denying Cenvat credit on steel items like MS sheet and coils, stating they were procured for fabrication of MS trays used in manufacturing. The appellant informed the department beforehand about availing Cenvat credit on these items. An audit revealed the credit taken, leading to a show cause notice as the items were deemed ineligible. Lower authorities upheld the denial citing lack of evidence on item usage. The appellant argued they had informed the department and provided a detailed usage chart, unchallenged by the Revenue, justifying the credit. The Revenue contended the appellant failed to prove item usage for capital goods fabrication, shifting the burden of proof onto the appellant as per Rule 9(5) of the Cenvat Credit Rules, 2004.

The Tribunal noted the appellant's intimation to the department about procuring MS sheets/coils for MS tray fabrication through a job worker for final product manufacturing. The appellant's detailed usage chart was presented, unaddressed by the lower authorities, resulting in a blanket denial of credit. The Tribunal emphasized that the burden of proof rested on the Revenue to show the items were not used as intended, which they failed to do. Consequently, the documents furnished by the appellant were deemed sufficient to support the Cenvat credit claim.

In conclusion, the Tribunal held that the appellant rightfully availed Cenvat credit on the steel items, as they were utilized in the fabrication of MS trays (considered capital goods) crucial for the final product manufacturing process. The impugned order was found to lack merit and was set aside, allowing the appeals with any consequential relief.

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