2022 (4) TMI 301 - AT - Central Excise

Tribunal grants Cenvat credit for safety items crucial in gold manufacturing

The Tribunal allowed the appeal, granting the appellant the right to claim Cenvat credit on specialized safety items crucial for gold manufacturing, ... CENVAT Credit - inputs - Motorised Fire rated rolling shutter - GI Flush, GI Flush Door and Drop Seal - GI Flush partition, GI Flush Door & Drop Seal for Flush Door - Wooden Opaque Inpill (part of Megtek Door for Security Purpose) - Main Safe Deposit vault Door - credit of service tax paid on services when availed prior to obtaining Central Excise Registration - credit of service tax paid on services availed during the date of Central Excise Registration to date of plant ready for manufacturing process - time limitation. Inputs - HELD THAT:- These goods were used in the appellant’s factory which is engaged in the manufacture of gold. The Adjudicating Authority has denied the credit on the ground that these goods such as shutter, door, flush door, etc are related to building. Therefore, the same is neither capital goods nor input. Whether the goods is input or otherwise it has to be decided on the basis of type of industry and the product manufactured therein - In the present case, the manufacturer is engaged in the manufacture of gold for which the safety of gold is a vital part of the overall manufacturing and trading thereof. It is found that all these goods even though are forming part of building but these are all specialized goods which are normally not installed in normal buildings. In the present case, product being gold, the safety of gold is very important. Accordingly, all these goods are specialized items which are installed for the storage and safety of the final product i.e. Gold. As per the definition of input, input means goods which is used in or in relation to the manufacture of final product, whether directly or indirectly. Therefore, goods which is used even not in the manufacture directly but even if it is used in relation to the manufacture and indirectly, the said goods qualify as inputs - Therefore, in the present case all the goods which are specialized goods used for storage and safety of the gold, these are considered to be inputs used in relation to the manufacture of the final product i.e. gold indirectly - credit allowed on all inputs. Some of the decisions on which reliance can be placed are M/S STEEL AUTHORITY OF INDIA LTD. VERSUS CCE & ST, RAIPUR [2016 (8) TMI 1110 - CESTAT NEW DELHI], HINDUSTAN ZINC LTD. VERSUS COMMISSIONER OF C. EX. & S.T., JAIPUR-II [2015 (11) TMI 1689 - CESTAT NEW DELHI] and COMMISSIONER OF CENTRAL EXCISE NAGPUR VERSUS M/S HYUNDAI UNITECH ELECTRICAL TRANSMISSION LIMITED AND ANOTHER [2015 (9) TMI 1083 - SUPREME COURT]. Whether appellant is entitled for CENVAT credit in respect of Service Tax paid on services prior to obtaining the Central Excise registration and also on the issue that services used during the date of Central Excise Registration till the date plant got ready for manufacturing process? - HELD THAT:- The Central Excise registration is not required for availing the CENVAT credit. The CENVAT credit eligibility is on the condition that the services were received by the assessee, the same was used in or in relation to the manufacture of final product and the final product has been cleared on payment of duty. Therefore, the eligibility of CENVAT credit cannot be related to the Central Excise registration - reliance placed in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [2011 (9) TMI 450 - KARNATAKA HIGH COURT] - Tribunal in various cases has thus held that even for the services received prior to Central Excise registration allowed the CENVAT credit on the input services. Therefore, this issue is no longer under dispute - credit allowed. Time Limitation - HELD THAT:- Though the appellant made out prima facie strong case on limitation but since the matter is decided on merit itself as discussed no conclusive decision on limitation is required. Appeal allowed - decided in favor of appellant. 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.