2013 (11) TMI 842 - AT - Central Excise

Tribunal allows Cenvat credit for steel used in cooling bed fabrication, emphasizing eligibility as inputs for capital goods.

The Tribunal overturned the decision denying Cenvat credit for steel items used in the fabrication of cooling beds, emphasizing their eligibility as ... Eligibility for cenvat credit – Goods Input or not - Plates, joists and channels used for fabrication of capital goods – Held that:- The rolling mill is covered by the Chapter heading 84.55 therefore, would be covered by the definition of ‘capital goods’ as given in Rule 2(a) of the Cenvat Credit Rules - since it is the cooling bed on which the rolling takes place, the same has to be treated as a component of the rolling mill, even though for installation of the rolling mill, the cooling bed has to be permanently fixed to the earth - Relying upon Union of India v. Associated Cement Company Ltd. [2010 (10) TMI 550 - CHHATTISGARH HIGH COURT] - the steel items have been used in fabrication of the cooling bed, have to be treated as input having been used in fabrication of the components of rolling mills, which are covered by the definition of capital goods – thus, they would be eligible for Cenvat credit, as the definition of input in Rule 2(k) also covers the inputs used for fabrication of capital goods for use in the factory – Decided in favour of Assessee. Issues:Denial of Cenvat credit for steel items used in the fabrication of cooling bed; Applicability of Cenvat credit rules; Time-barred demand for Cenvat credit.Analysis:1. Denial of Cenvat credit for steel items used in the fabrication of cooling bed:The case involved the appellant, manufacturers of rolled steel products, who took Cenvat credit for plates and joists used in fabricating cooling beds for rolling mills. The department contended that as the cooling beds were fixed to the earth, the items used cannot be treated as inputs for capital goods and are not eligible for Cenvat credit. The Dy. Commissioner confirmed the demand for Cenvat credit, which was upheld by the Commissioner (Appeals). However, the appellant argued that the steel items were used in the fabrication of capital goods and should be eligible for Cenvat credit. The Tribunal agreed, stating that the cooling bed, being a component of the rolling mill, should be considered a capital good. The Tribunal referenced a judgment allowing Cenvat credit for items used in the fabrication of kilns for cement plants, supporting the appellant's claim.2. Applicability of Cenvat credit rules:The Tribunal analyzed the definition of 'capital goods' under the Cenvat Credit Rules and concluded that since the cooling bed was an integral part of the rolling mill, the steel items used in its fabrication should be considered inputs for capital goods. The Tribunal emphasized that the definition of 'input' under the rules includes items used in the fabrication of capital goods for factory use. By applying this interpretation, the Tribunal found that the denial of Cenvat credit was incorrect based on the specific circumstances of the case and relevant legal precedents.3. Time-barred demand for Cenvat credit:The appellant argued that the demand for Cenvat credit was time-barred as the credit availed was disclosed in the ER-I Returns and was detected during a central excise records audit. The appellant contended that there was no willful suppression of information. The Tribunal did not delve deeply into this issue as it found in favor of the appellant based on the eligibility of Cenvat credit for the steel items used in the fabrication of capital goods. The Tribunal set aside the impugned order, allowing the appeal and ruling in favor of the appellant.In conclusion, the Tribunal overturned the decision denying Cenvat credit for steel items used in the fabrication of cooling beds, emphasizing the eligibility of such items as inputs for capital goods. The judgment highlighted the importance of considering the specific context and purpose of the items in question when determining Cenvat credit eligibility, ultimately ruling in favor of the appellant.