2015 (10) TMI 2072 - AT - Central Excise

Tribunal allows CENVAT Credit on manufacturing inputs including Shapes, Sections, Angles, Channels, and TMT bars

The Tribunal ruled in favor of the appellant, setting aside the denial of CENVAT Credit on inputs claimed for manufacturing capital goods. The disputed ... CENVAT credit on inputs used for manufacture of capital goods - definition of capital goods and inputs - beneficial construction of the CENVAT Scheme - inputs becoming part of final productCENVAT credit on inputs used for manufacture of capital goods - definition of capital goods and inputs - beneficial construction of the CENVAT Scheme - Admissibility of CENVAT credit on Shapes, Sections, Angles, Channels, TMT bars and welding electrodes claimed as inputs used in the manufacture of moulds (capital goods). - HELD THAT: - The Tribunal accepted the appellants' case that the impugned items were used in the fabrication and repair of moulds which are specifically mentioned in the definition of capital goods, and that TMT bars were used as stirring rods which in the process became part of the final product. Applying a beneficent construction to the CENVAT Scheme, the Court held that inputs used in the manufacture of capital goods are eligible for credit. The appellants supported their case with a Chartered Engineer certificate and photographs explaining use of the items in mould fabrication; no case was made by the Department that the items were used for construction or foundations. The Tribunal distinguished the earlier decision involving the same appellant where those items had been claimed as capital goods and credit was disallowed, noting that in the present case the claim is as inputs for manufacturing capital goods. Reliance was also placed on the decision in LSR Specialty Oils (P) Ltd. Vs. CCE, Belapur where MS angles and HR sheets used to fabricate specified capital goods were held eligible as inputs for capital goods. In view of these facts and the precedent, the impugned denial of credit was set aside.The impugned order denying CENVAT credit on the specified items is set aside and the appeal is allowed, with consequential reliefs if any.Final Conclusion: CENVAT credit on Shapes, Sections, Angles, Channels, TMT bars and welding electrodes used in the fabrication or repair of moulds (which are specified capital goods), or which become part of the final product in the manufacturing process, is admissible; the impugned order denying such credit is set aside and the appeal is allowed. Issues:Challenge to denial of CENVAT Credit on inputs claimed for manufacturing capital goods.Detailed Analysis:Issue 1: Denial of CENVAT CreditThe appeal challenges the denial of CENVAT Credit on inputs claimed to be used in the manufacture of capital goods. The appellant, engaged in the manufacture of steel ingots and castings, availed credit on items like Shapes, Sections, Angles, Channel, TMT bars, and welding electrodes as inputs. The dispute arose when the department objected to these items not falling under the definition of inputs. The appellant claimed that these items were used for the manufacture of capital goods, specifically for making moulds and stirring metal in the furnace.Issue 2: Admissibility of CreditThe appellant contended that the items in question, such as Shapes, Sections, Angles, Channels, and TMT Bar, were essential inputs used in the fabrication of moulds and stirring of metal during the manufacturing process. The department argued against the admissibility of credit, citing a previous tribunal decision where credit was denied on similar items. However, the appellant provided evidence, including a Chartered Engineer Certificate and photographs, demonstrating the use of these items in the manufacture of moulds.Issue 3: Interpretation of InputsThe Tribunal analyzed the definition of inputs under the CENVAT Scheme, emphasizing that the term should be construed liberally to promote the scheme's objectives. The appellant's argument that the disputed items were used in the fabrication of moulds, which are considered capital goods, supported their claim for credit on these inputs. The Tribunal also referenced a previous case where credit was allowed on inputs used for manufacturing capital goods, further strengthening the appellant's position.Conclusion:After considering the arguments and evidence presented, the Tribunal concluded that the disputed items were indeed used as inputs for manufacturing capital goods, specifically moulds in this case. Given the beneficial nature of the CENVAT Scheme, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief.