2017 (1) TMI 156 - AT - Central Excise

Tribunal allows credit on specified items as capital goods under Chapter 72 and 73

CC&CE, Visakhapatnam-II Versus M/s. Andhra Pradesh Paper Mills Ltd.

The Tribunal upheld the Commissioner(Appeals)'s decision to allow credit on MS angles, channels, beams, joists, HR coils, Floor/GI gratings, galvanized ... Cenvat credit on capital goods - Held that: - in the appellant’s own case, in the appeal filed by the Department, for the period October 2006 to April 2007, the appeal was dismissed by the Tribunal - Appeal dismissed. Issues:Department's challenge to credit on MS angles, channels, beams, joists, HR coils, Floor/GI gratings, galvanized step treads under Chapter 72 and 73 of CETA as capital goods.Analysis:Issue 1: Eligibility of credit on various items under Chapter 72 and 73 of CETA as capital goodsThe Department challenged the Commissioner(Appeals)'s order allowing credit on MS angles, channels, beams, joists, HR coils, Floor/GI gratings, galvanized step treads under Chapter 72 and 73 of CETA as capital goods. The Department argued that these items were used for expansion of the plant, construction of civil structures, and making steel structures for platforms and staircases, which, according to them, did not qualify for credit. The Department emphasized that these items were not eligible for credit as they were used for construction purposes and not directly related to the manufacture of final goods.Issue 2: Interpretation of the definition of capital goods and inputsThe Tribunal referred to a previous judgment in the appellant's own case for the period 2006-07, where the appeal filed by the Department was dismissed. The Tribunal highlighted that during the relevant period, the explanation to the definition of inputs did not restrict the use of MS items for construction purposes. The Commissioner(Appeals) emphasized the wide and liberal definition of capital goods, stating that the eligibility for CENVAT credit should not be solely based on the chapter/sub-heading of the goods but should consider factors like utility in the factory, contribution to the manufacture of final goods, and presence in the final product. The Commissioner stressed that the impugned goods were used in the factory premises, had specific utility, and contributed to the production process, either directly or indirectly.Conclusion:The Commissioner(Appeals) made detailed observations regarding the eligibility of the items under Chapter 72 and 73 of CETA as capital goods, emphasizing their utility, contribution to the manufacturing process, and presence in the final product. The Tribunal upheld the Commissioner's findings, noting the previous dismissal of the Department's appeal in a similar case. Consequently, the Tribunal held that the Department's appeal lacked merit and dismissed it.