2016 (1) TMI 922 - AT - Central Excise

Tribunal overturns denial of cenvat credit on machine parts for cement manufacturing, citing Rule 57Q eligibility.

The Tribunal allowed the appeal, rejecting the denial of cenvat credit on machine parts used in cement manufacturing. Emphasizing the eligibility of ... Admissibility of capital goods credit - parts used by the appellant in the capital goods of plant and machinery which in turn are used in the manufacture of excisable goods, cement and clinker and inputs used in manufacture of final product - Held that:- We find that the Hon'ble Supreme Court in the case of CCE Coimbatore Vs Jawahar Mills Ltd. (2001 (7) TMI 118 - SUPREME COURT OF INDIA) has settled the issue of credit availed on various parts used in the plant and machinery as capital goods and under erstwhile rule 57Q. In respect of input 'Aquachem', this Tribunal in the case of India Cements Vs CCE Trichy [2010 (1) TMI 394 - CESTAT, CHENNAI] has already allowed input credit. By respectfully following the apex court's decision (supra) and the Tribunal's decision (supra), we hold that appellants are eligible for credit on items used in the plant and machinery for manufacture of cement and clinkers under rule 57Q (1) of the CER 1994. Accordingly, we set aside the impugned order to the extent of denial of credit and the consequential demand of recovery. Impugned order is set aside and the appeal is allowed. - Decided in favour of assessee. Issues: Disallowance of cenvat credit on parts used in factory for manufacturing cement and clinkers.The judgment pertains to an appeal arising from an Order-in-Appeal dated 31.10.2003 passed by the Commissioner (Appeals) concerning the disallowance of cenvat credit on various machine parts used in the appellant's cement factory. The adjudicating authority partially allowed the credit but denied capital goods credit of Rs. 12,73,506, stating that the items were not listed under Rule 57Q of the Central Excise Rules, 1944. The Commissioner (Appeals) partially upheld the denial of credit on 21 items, leading to the present appeal.The key argument presented by the appellant's consultant was that the issue had been settled by the Supreme Court in prior cases such as CCE Coimbatore Vs Jawahar Mills Ltd. and Vikram Cements Vs CCE Indore. They also highlighted a case involving the Tribunal where credit was initially disallowed but later allowed by the Supreme Court, emphasizing that the items in question were used for construction purposes for plant and machinery. The consultant relied on a Tribunal decision regarding input credit for water purification in cement manufacture and a circular clarifying the eligibility of credit for parts used with capital goods.The Departmental Representative reiterated the findings of the adjudication order, leading to a detailed discussion during the hearing. The Tribunal ultimately focused on the admissibility of capital goods credit on parts used in plant machinery for manufacturing cement and clinkers, under the erstwhile Rule 57Q of the Central Excise Rules, 1944. Referring to previous Supreme Court judgments and the appellant's own case, the Tribunal concluded that the items in question were eligible for credit as they were used in the plant and machinery for manufacturing cement and clinkers. Citing the finality of the Supreme Court's decision in the appellant's case and a previous Tribunal decision on input credit, the Tribunal set aside the impugned order, allowing the appeal and rejecting the denial of credit and the consequential recovery demand.In summary, the judgment addressed the disallowance of cenvat credit on machine parts used in cement manufacturing, emphasizing the eligibility of credit under Rule 57Q for items used in plant machinery. The decision was based on previous legal precedents and the specific application of rules and clarifications, ultimately leading to the allowance of the appeal and the rejection of the denial of credit.