2016 (6) TMI 712 - AT - Central Excise

Appeal granted for Cenvat credit on maintenance items, emphasizing eligibility for capital goods credit.

The Tribunal allowed the appeal by M/s U. G. Sugar & Industries Ltd., remanding the matter to the adjudicating authority for reassessment of the ... Cenvat credit availed and utilised on H.R.Plates, shapes and sections - disallowance only for the reason that capital goods do not include goods and commodities falling under chapter 72 of the Central Excise Tariff, 1985 - Held that:- Capital goods or inputs utilised in maintenance of plant and machines being capital goods, the same is eligible for Cenvat credit. As no production can take place without proper upkeep of the plant and machinary. Further plant and machines also includes the loading platforms and inspection platforms. As the impugned order is silent on the exact usage of the inputs in question I set aside the same to the extent inputs relating to the amount of ₹ 87,211/- and remand the matter to the adjudicating authority for fresh determination in accordance with law after ascertaining the utilization of the said inputs. See CCE Versus Rajasthan Spinning Mills Ltd [2010 (7) TMI 12 - SUPREME COURT OF INDIA] Issues:- Eligibility of Cenvat credit on H.R. Plates, shapes, and sections used for repair and maintenance of capital goods.Analysis:The case involves an appeal by M/s U. G. Sugar & Industries Ltd. against an Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Meerut II. The dispute revolves around the eligibility of Cenvat credit amounting to Rs. 87,211/- utilized on H.R. Plates, shapes, and sections for repair and maintenance of capital goods. The appellant argues that these items were essential for the upkeep of capital equipment, including plant and machinery, without which manufacturing activities could not occur. The adjudicating authority disallowed the credit based on the premise that goods falling under Chapter 72 of the Central Excise Tariff, 1985, are not considered capital goods. The appellant contends that without a proper determination of the actual usage of the items in question, the demand should not have been confirmed. The appellant urges for a thorough examination of the issue and requests the impugned order to be set aside for redetermination in accordance with the law.The learned D.R. relies on the impugned order, emphasizing the disallowance of credit based on the classification of the items under Chapter 72 of the Central Excise Tariff, 1985. However, after considering the arguments presented, the Tribunal finds that capital goods or inputs used in the maintenance of plant and machinery, which are themselves considered capital goods, are eligible for Cenvat credit. The Tribunal highlights that proper upkeep of plant and machinery, including loading and inspection platforms, is crucial for manufacturing activities. Since the impugned order lacks clarity on the specific usage of the inputs in question, the Tribunal sets aside the order regarding the Rs. 87,211/- credit and remands the matter to the adjudicating authority for a fresh determination. The Tribunal cites relevant judgments such as CCE Versus Rajasthan Spinning Mills Ltd, Saraswati Sugar Mills Vs. Commissioner of Central Excise, Delhi III, and Commissioner of Central Excise, Mysore Vs. ICL Sugar Ltd. to guide the redetermination process.In conclusion, the appeal is allowed by way of remand, with the Tribunal directing the adjudicating authority to reassess the utilization of the inputs in question in light of the principles outlined in the relevant judgments.