2014 (9) TMI 107 - AT - Central Excise

Manufacturers can claim CENVAT credit for supporting structures integral to the plant

COMMISSIONER OF CENTRAL EXCISE, PUNE-II Versus DONGARAI SANGARESHWAR SSK LTD

The judge upheld the lower authorities' decision and dismissed the revenue's appeal, allowing the respondent, a sugar and molasses manufacturer, to claim ... Denial of CENVAT Credit - Supporting structure - Held that:- In the case of Saraswati Sugar Mills (2011 (8) TMI 4 - SUPREME COURT OF INDIA), the issue before the Apex Court was whether the Joints channels, angles and MS beams used in the fabricating supporting structures for installation of equipments are entitled to CENVAT credit. Admittedly, these items were purchased by the assessee to erect the supporting structure at the factory of the assessee which were embedded to earth. Therefore, they became immovable property and CENVAT credit was denied. But the same is not with the case in hand. In this case, these supporting structures were purchased by the respondent as part of sugar plant. Therefore, the facts of the case of Saraswati Sugar Mills (supra) are not relevant to the case in hand. India Cements Ltd. (2013 (5) TMI 403 - CESTAT CHENNAI) the issue came before this Tribunal wherein this Tribunal has held that as these structures were purchased as part of the plant therefore they are entitled for CENVAT credit - Decided against Revenue. Issues Involved:Appeal against denial of CENVAT credit on supporting structure.Detailed Analysis:1. Issue of Denial of CENVAT Credit:The appeal revolves around the denial of CENVAT credit on the supporting structure by the revenue. The respondent, a sugar and molasses manufacturer, took credit for all materials supplied by the supplier, including the supporting structure. The revenue contended that CENVAT credit for supporting structures was not admissible. Both lower authorities dropped the demand based on previous decisions. The revenue challenged this decision, arguing that supporting structures are not components or spares of capital goods. The appellant relied on the decision in Saraswati Sugar Mills case, where the Apex Court ruled against CENVAT credit for supporting structures.2. Interpretation of Supporting Structures:The appellant argued that the supporting structures were not manufactured in their factory but were purchased from the supplier of the sugar plant. They claimed that the supporting structures were part of the sugar plant and thus eligible for CENVAT credit. The appellant cited agreements with the supplier and referred to relevant case laws like Dhampur Sugar Mills Ltd. and India Cements Ltd. to support their stance. Additionally, they pointed to a Board Circular to strengthen their argument.3. Judicial Interpretation and Precedents:The presiding judge analyzed the facts of the case and distinguished it from the Saraswati Sugar Mills case. The judge noted that the supporting structures in dispute were not erected in the factory of the respondent, unlike the case considered by the Apex Court. Referring to the India Cements Ltd. case, the judge highlighted that structures purchased as part of the plant are entitled to CENVAT credit. The judge emphasized that the supporting structures in question were part of the sugar plant and not intended for erection at the respondent's site, thereby allowing the respondent to claim the credit.4. Decision and Ruling:Based on the interpretation of relevant precedents and the specific circumstances of the case, the judge upheld the impugned order. The judge dismissed the appeal filed by the revenue, concluding that the respondent was entitled to take the credit for the supporting structures. By aligning with the decision in the India Cements Ltd. case, the judge found no fault with the lower authorities' decision to drop the demand for denying CENVAT credit. The ruling favored the respondent's position regarding the admissibility of CENVAT credit for the supporting structures purchased as part of the sugar plant.In conclusion, the judgment clarifies the eligibility of CENVAT credit for supporting structures purchased as part of a plant, emphasizing the importance of specific factual circumstances and relevant legal precedents in determining the admissibility of such credits.