2018 (1) TMI 869 - AT - Central Excise

Admissibility of Cenvat Credit on Essential Items Upheld in Tax Dispute

The Judicial Member upheld the admissibility of Cenvat Credit on items like Welding Electrodes, Safety Helmet, and Seals, agreeing with the Commissioner ... CENVAT credit - capital goods - Concrete Sleeper - Held that: - the Tribunal in a recent decision in the case of Ultratech Cement Limited Vs. Commissioner of Customs & Central Excise [2016 (9) TMI 284 - CESTAT HYDERABAD] on an identical situation allowed the credit on Mono Block Concrete Sleeper for Railway track - also, Hon’ble Supreme Court in the case of JayaswalNcco Limited Vs. Commissioner of Central Excise, Raipur [2015 (4) TMI 569 - SUPREME COURT] allowed the credit on Railway Track - appeal dismissed - decided against Revenue. Issues involved: Appeal against disallowance of Cenvat Credit on specific items including Welding Electrodes, Welding Machine, Concrete Sleeper, and Safety Helmet. Admissibility of Cenvat Credit on Concrete Sleeper disputed.Analysis:1. Background: The appeal was filed by the Revenue against the Order-in-Appeal disallowing Cenvat Credit on certain items used in the manufacturing process of iron and steel products.2. Disallowed Cenvat Credit: The Adjudicating authority disallowed Cenvat Credit on specific items like Welding Electrodes, Welding Machine, Concrete Sleeper, and Safety Helmet. A penalty was imposed along with interest.3. Appellate Order: The Commissioner (Appeals) set aside the Adjudication Orders and allowed the appeals filed by the Assessee/Respondent, prompting the Revenue to file an appeal against this decision.4. Judicial Review: The Judicial Member found the Order-in-Appeal to be proper concerning the admissibility of Cenvat Credit on Welding Electrodes, Safety Helmet, and Seals. However, an issue arose regarding the Concrete Sleeper involving a substantial amount.5. Contentions: The Assessee submitted that the Concrete Sleeper was essential for handling hot materials during the manufacturing process and was used for transporting materials within the factory premises, justifying the admissibility of credit.6. Precedents: The Revenue argued against relying on a specific Tribunal decision, emphasizing the ineligibility of the Concrete Sleeper for Cenvat Credit. However, a recent decision in a similar case favored the admissibility of credit on Mono Block Concrete Sleeper for Railway track.7. Legal Support: Reference was made to various case rulings supporting the admissibility of similar inputs in the manufacturing process, highlighting the importance of Safety Helmet and other items for workplace safety and operational efficiency.8. Judicial Decisions: The Tribunal's decision in the Ultratech Cement case supported the admissibility of credit on essential items used within the factory premises, establishing a nexus with the manufacturing process.9. Supreme Court Precedent: The judgment in JayaswalNcco Limited case allowed credit on Railway Track, further strengthening the argument for admissibility of credit on essential items used in manufacturing.10. Conclusion: Considering the arguments, precedents, and legal principles, the Judicial Member agreed with the findings of the Commissioner (Appeals) and rejected the appeal filed by the Revenue, thereby upholding the admissibility of Cenvat Credit on the disputed items.