Appellant wins cenvat credit on steel items for manufacturing capital goods

The Tribunal held that the appellant was eligible for cenvat credit on steel items used for fabrication of capital goods and support structures, which were embedded to earth and consumed internally in the manufacturing process. The appellant's reliance on a Chartered Engineer Certificate and a decision of the Chhatisgarh High Court supported their claim. The impugned order denying the credit was set aside, and the appeal was allowed with consequential relief.

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Issues involved:
The denial of cenvat credit on steel items along with interest and penalty.

Summary:

Issue 1: Denial of cenvat credit on steel items
The appellant, a manufacturer of rolled products, extended their factory by installing a new induction furnace unit for manufacturing MS ingots and wire rods. They claimed exemption under Notification No.67/95-CE for items used in construction. The department alleged duty evasion and issued a show cause notice. The appellant contended that the goods qualified as capital goods based on a Chartered Engineer Certificate. The dispute centered on whether the goods met the essential characteristics of movability and marketability for levy of duty. The appellant argued for eligibility of cenvat credit based on the Chartered Engineer's certification and cited a decision of the Chhatisgarh High Court. They also contested the invocation of the extended period for demand, claiming it was known to the department. The department supported the findings of the impugned order.

Issue 2: Eligibility of cenvat credit
The main issue was whether the items manufactured by the appellant and used for fabrication of capital goods/support structures, which were embedded to earth, rendered the appellant liable to pay duty. The revenue did not dispute that these items were used for fabrication of capital goods consumed internally and eventually used in the manufacture of the final product, ingots. Relying on a decision of the Chhatisgarh High Court, the Tribunal held that the appellant was not required to pay duty on the items used for fabrication of support structures and capital goods as inputs, ultimately used in the manufacture of their final product. The impugned order was set aside, and the appeal was allowed with any consequential relief.

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