2018 (6) TMI 733 - AT - Central Excise

Tribunal Upholds CENVAT Credit for Manufacturing Support Structures

Commissioner of GST & Central Excise, Trichy Versus M/s. Shree Ambika Sugars Ltd.

The Tribunal upheld the Commissioner (Appeals) decision allowing CENVAT credit on MS angles and channels used for support structures in manufacturing ... CENVAT credit - whether the MS angles, MS channels, HR coils etc. used for support structures and fabrication of worn out molasses tank, operational platform is eligible for credit? - Held that:- The respondent is engaged in manufacturer of final products and there is very close nexus with the inputs (MS channels etc.) as they were used for fabrication of support structures for the reason that without such support structures the manufacturing activity cannot be carried out as they become integral part of the machineries after fabrication - In the case of Thiru Arooran Sugars [2017 (7) TMI 524 - MADRAS HIGH COURT], the Hon’ble High Court has considered the very same issue and held that credit is eligible - appeal dismissed - decided against Revenue. Issues:Whether MS angles, MS channels, HR coils used for support structures and fabrication of worn out molasses tank, operational platform are eligible for credit.Analysis:The appellants, sugar and molasses manufacturers, availed CENVAT credit on various items used in construction work. The Department contended that items under Chapter 72, like MS joists and plates, are not capital goods and thus not credit eligible. The original authority allowed credit on some items but disallowed on others like supporting structures and parts of machinery. The Commissioner (Appeals) allowed credit, leading the Department to appeal.The Revenue argued that items like MS angles and channels, when used for fabrication and setting up of structures, are not credit eligible as they become immovable property. They cited a Tribunal decision in Tower Vision India Pvt. Ltd. to support this argument.The respondent's counsel argued that prior to 7.7.2009, the use of MS items was not restricted, and the impugned items were crucial for manufacturing activities. They referenced a High Court judgment in favor of the assessee in a similar case.The Tribunal considered past judgments and held that items like MS channels used for support structures are integral to manufacturing activities and thus credit eligible. They distinguished the Tower Vision India Pvt. Ltd. case, stating it was about output services, unlike the present case involving final product manufacturing. The Tribunal upheld the Commissioner (Appeals) order, dismissing the Revenue's appeal.In conclusion, the Tribunal found no issues with the Commissioner (Appeals) order, upholding it and dismissing the Revenue's appeal. The miscellaneous applications filed by Revenue were allowed.