2016 (1) TMI 1285 - AT - Central Excise

Appeal granted: Steel items credit allowed for sugar manufacturing process.

M/s. Sree Rayalseema Sugar & Energy Pvt. Ltd. Versus CC, CE&ST, Tirupati

The tribunal allowed the appeal, holding that the credit on steel items like MS angles, channels, HR plates, alloy tubes, etc., used in the manufacturing ... CENVAT credit - S angles, channels, beams, HR plates, coils, steel tubes etc - denial on the ground that these were used for supporting structure, platforms for the equipments and interconnecting pipelines to the equipment like evaporators, sugar melting system etc. - Held that: - In the case of India Cements Ltd.[2015 (3) TMI 661 - MADRAS HIGH COURT], it has been categorically held that credit is admissible on MS items used for supporting structures - credit allowed - decided in favor of assessee. Issues Involved:Admissibility of credit on duty paid for steel items like MS angles, channels, beams, HR plates, coils, and steel tubes used in the manufacturing process.Analysis:The appeal revolved around the admissibility of availed credit on steel items utilized in the manufacturing process of sugar and molasses. The appellant, a manufacturer registered with the Central Excise Department, had taken credit on steel items like MS angles, channels, HR plates, alloy tubes, etc., under the category of inputs. These steel items were used for supporting structures, platforms for equipment, and interconnecting pipelines. The department contended that such credit was not admissible, leading to a show-cause notice, demand recovery, interest, and penalty imposition. The original authority and the Commissioner(Appeals) upheld the demand. The appellant argued that the steel items were integral for fabrication and functioning of capital goods, citing relevant judgments.The appellant's counsel argued that the steel items were crucial for the fabrication of supporting structures and platforms for equipment, emphasizing their role in the manufacturing process. The counsel referenced judgments like Divi's Laboratories Ltd. and India Cements Ltd. to support the contention that credit on such steel items is admissible. However, the authorized representative for the respondent strongly opposed this argument, asserting that the credit should not be allowed as the steel items were used as support structures and platforms/foundations for equipment, not qualifying as inputs or capital goods.The tribunal, after considering the arguments and perusing the records, referred to various judgments, including Mundra Ports & SEZ Ltd. case and India Cements Ltd. case. It noted that the High Courts had held credit admissible on steel items used for supporting structures based on the principle that without such structures, capital goods could not function, affecting the manufacturing process. Relying on the precedents and the interpretation of relevant rules, the tribunal concluded that credit on the steel items in question was admissible. Consequently, the impugned order disallowing the credit was set aside, and the appeal was allowed with any consequential reliefs.In conclusion, the judgment clarified the admissibility of credit on steel items crucial for supporting structures and platforms in the manufacturing process, aligning with precedents and legal interpretations supporting the appellant's claim for credit on such inputs.