2023 (12) TMI 745 - AT - Central Excise

Goods Classified as Inputs, Not Capital Goods; Full Cenvat Credit Allowed, Interest Demand Overturned, Appellant Relieved.

M/s Jai Balaji Industries Limited (Unit IV) Versus Commissioner of Central Excise, Bolpur

The Tribunal ruled in favor of the appellant, determining that the goods in question were inputs, not capital goods, thus allowing full cenvat credit in ... Cenvat credit - Demand of interest raised against the appellant treating the goods as capital goods - entitlement to take the cenvat credit of 50% of duty paid in the year of procurement of the said goods and remaining 50% in the successive year - HELD THAT:- It is found that the goods used as a damping/patching material in the blast furnace to provide high voltage to the furnace and prevent hot metal from coming out during the manufacture of the ferro alloys. As these items have been used and consumed by the appellant during the manufacturing process, therefore, these are to be treated as inputs not capital goods. The appellant has correctly taken the cenvat credit on the said goods as inputs. Therefore, the proceedings against the appellant are not sustainable - the demand of interest is not sustainable against the appellant - appeal allowed. Issues Involved: The issue involved in this case is whether certain goods purchased by the appellant should be treated as inputs or capital goods for the purpose of claiming cenvat credit, and whether the appellant is liable to pay interest for the cenvat credit taken in the year of procurement.Summary:Issue 1: Classification of Goods as Inputs or Capital GoodsThe appellant purchased goods including Carbon Electrode Paste, Tamping Carbon Paste, Whytheat-A, and Castable Refractory. The Revenue contended that these goods were capital goods, entitling the appellant to take cenvat credit of 50% of duty paid in the procurement year and the remaining 50% in the successive year. However, upon examination, it was found that these goods were used as damping/patching material in the blast furnace during the manufacturing process of ferro alloys. As they were consumed in the manufacturing process, the goods were deemed to be inputs, not capital goods.Issue 2: Liability to Pay InterestThe appellant had taken cenvat credit in the year of procurement for the goods treated as inputs. Subsequently, proceedings were initiated against the appellant, and interest was demanded for the intervening period. The Tribunal, after considering the submissions, held that since the goods were rightly classified as inputs, the demand of interest against the appellant was not sustainable. Consequently, the impugned order was set aside, and the appellant was relieved from the liability of paying interest.In conclusion, the Tribunal allowed the appeal in favor of the appellant and provided consequential relief, if any, after setting aside the impugned order.