2018 (7) TMI 1707 - AT - Central Excise

Appellate Tribunal allows Cenvat Credit on essential manufacturing components

M/s. Baerlocher India Additives Pvt. Ltd. Versus C.C.E., Indore

M/s. Baerlocher India Additives Pvt. Ltd. Versus C.C.E., Indore - TMI Issues:- Interpretation of capital goods under Cenvat Credit Rules, 2004- Eligibility of MS Bars, MS Channels, MS Joists & MS beams as capital goods for availing Cenvat CreditThe judgment by the Appellate Tribunal CESTAT NEW DELHI involved an appeal against the order of Commissioner (Appeals) regarding the eligibility of availing Cenvat Credit on MS Bars, MS Channels, MS Joists & MS beams used by the appellant for manufacturing products falling under specific chapters of the Central Excise Tariff Act. The Department had denied the credit on these items, leading to a demand raised in a show cause notice. The Commissioner (Appeals) reduced penalties but confirmed the demand, prompting the appellant to file the present appeal.The appellant argued that the items in question were essential for erecting a blending machine necessary for manufacturing the final products, citing relevant case law to support their claim. They contended that the items should be considered as capital goods and thus eligible for Cenvat Credit. On the other hand, the Department justified the denial of credit based on the definition of capital goods under the Cenvat Credit Rules, 2004.The Tribunal analyzed the definitions of capital goods and inputs under the Cenvat Credit Rules, 2004 to determine the eligibility of the disputed items for availing credit. While the items did not fall under the specified chapters in the definition of capital goods, they could be classified as components, spares, or accessories of capital goods. The Tribunal referred to relevant case law, including a decision by the Madras High Court, to support the appellant's argument that the disputed items were integral components necessary for the manufacturing process.Based on the interpretation of the definitions and the evidence provided, including a Chartered Engineer Certificate, the Tribunal concluded that the appellant had rightly availed Cenvat Credit on the items in question. Therefore, the order confirming the demand was set aside, and the appeal was allowed in favor of the appellant.In conclusion, the judgment clarified the interpretation of capital goods under the Cenvat Credit Rules, 2004 and determined the eligibility of specific items like MS Bars, MS Channels, MS Joists & MS beams for availing Cenvat Credit. The decision emphasized the importance of considering the essentiality of items in the manufacturing process and relied on relevant case law and expert certification to support the appellant's claim for credit eligibility.