Credit available on angles, channels, MS Plates when proved that they are used in manufacture of machinery.

PJ/Case Law/2013-14/2060

Case:-K.B.ROLLING MILLS (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, HYDERABAD-I

Citation:-2014 (299) E.L.T. 466 (Tri.-Bang.)

Brief Facts:- The appellant availed Cenvat credit of duty paid on angles, channels, MS plates etc. on the ground that the appellant has no evidence for showing that these items have been used in the manufacture of components/machinery/equipment, etc., and cannot qualify as inputs, proceedings were initiated to deny the Cenvat credit of Rs. 3,21,565/- availed on these items during June to November, 2006. The proceedings have culminated in confirmation of the demand for the Cenvat credit with interest and penalty equal to the credit availed.

Appellant Contentions:-The learned counsel submits that the appellant had produced the Chartered Engineer’s certificate to show that inputs have been used within the factory for fabrication of machines/ equipments, etc. Further extended period has been invoked in this case. Extended period could not have been invoked since during the period till the matter was finally decided in the case of Vandana Global Ltd. by the Larger Bench as reported in2010(253) E.L.T. 440 (Tri.-LB), there were contrary decisions and therefore they entertained bona fide belief that they were eligible for the credit.

Respondent Contentions:-Learned AR would submit that in this case the appellant had not maintained any record for issue of these materials and their utilization. It is the responsibility of the assessee to show that inputs have been used in the factory for the purpose for which they claimed the Cenvat credit. Further he also submits that Chartered Engineer’s certificate cannot be accepted since it has no date; it does not say that Chartered Engineer visited the factory; it does not say when the Chartered Engineer visited the factory. Further the Chartered Engineer also says that the details worked out by him are estimates. He also submits that the Chartered Engineer himself has stated that in many cases the inputs have been used for fabrication of structural supports. He says that the Chartered Engineer’s certificate has to be rejected under these circumstances.

Reasoning of Judgment:-After hearing both sides, Tribunal finds that in this case a detailed stay order was passed wherein the Tribunal had given detailed observations for requiring the appellant to make pre-deposit. Even at the final hearing stage, no new facts to support the case of the appellant have been brought out. The appellants had failed to maintain proper records for the utilization of the inputs and admittedly there are no records reflecting the issue of goods and their utilization in their factory. Further, total agreement with the submissions made by the learned AR was made by the Tribunal as regards the certificate issue by the Chartered Engineer. Under these circumstances, it was held that the appellant has failed to show that the items in dispute have been used for the purpose for which they were received. Under these circumstances, the impugned order has to be upheld. Accordingly the appeal is rejected.

Decision:-Appeal Rejected.

Comment:-The crux of this case is that Cenvat credit is not available on angles, channels, MS plates, etc. which is used apparently for fabrication of structural supports. In case of Vandana Global Ltd. by the Larger Bench as reported in 2010(253) E.L.T. 440 (Tri.-LB) it was confirmed that credit is not available on supporting structures. Accordingly, for availing cenvat credit on angles, channels, MS Plates, the assessee is required to prove that they are used in the manufacture of machinery or its parts and components and are not used as supporting structures.

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PJ/Case Law/2013-14/2060

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