2022 (4) TMI 301 - AT - Central Excise

Tribunal grants Cenvat credit for safety items crucial in gold manufacturing

SOVEREIGN METALS LTD. Versus C.C.E. -AHMEDABAD-II

SOVEREIGN METALS LTD. Versus C.C.E. -AHMEDABAD-II - TMI Issues involved:1. Admissibility of Cenvat credit on specific items.2. Eligibility for Cenvat credit on service tax paid on services before Central Excise Registration.3. Eligibility for Cenvat credit on service tax paid on services from Central Excise Registration to plant readiness.Analysis:Issue 1: Admissibility of Cenvat credit on specific items:The appellant, engaged in gold manufacturing, sought Cenvat credit on specialized items like fire-rated rolling shutters, doors, and security equipment. The Adjudicating Authority denied credit, stating these were not directly related to manufacturing. However, the Tribunal found these items crucial for the safety of the final product, gold. Citing precedents, the Tribunal held that even if not directly used in manufacturing, if essential for the process, such goods qualify as inputs. Therefore, the specialized items for gold safety were deemed as inputs, making Cenvat credit admissible.Issue 2: Eligibility for Cenvat credit on pre-registration services:The appellant claimed Cenvat credit on services availed before Central Excise Registration, arguing that registration and credit eligibility are independent. The Tribunal concurred, emphasizing that credit eligibility hinges on service usage for manufacturing, irrespective of registration timing. Precedents supported this view, allowing Cenvat credit for services pre-registration. Thus, the Tribunal upheld the appellant's right to claim such credits.Issue 3: Eligibility for Cenvat credit on services pre-plant readiness:Regarding services availed between Central Excise Registration and plant readiness, the appellant claimed and utilized Cenvat credit. The Tribunal found no restrictions in the Cenvat Credit Rules for such claims. It noted that these services, including legal, consultancy, and security services, were essential for manufacturing final products. Relying on precedents, the Tribunal affirmed the appellant's right to avail Cenvat credit on these services.Additional Points:- The Tribunal dismissed the demand upheld in the impugned order, emphasizing the appellant's transparent credit claims.- While the appellant raised a limitation issue, the Tribunal did not conclusively address it due to the merit-based decision.- Ultimately, the Tribunal set aside the impugned order, allowing the appeal with consequential reliefs.This detailed analysis showcases the Tribunal's thorough consideration of each issue, relying on legal precedents and statutory provisions to render a comprehensive judgment in favor of the appellant.