Eligibility of Cenvat Credit of MS Plates, HR Sheets etc. used for fabrication of chimney.

PJ-Case law-2013/14-1604

Case:-METROCHEM INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., VADODARA -I

Citation:-2013(292) E.L.T. 578 (Tri.-Ahmd.)

Brief Facts:-The relevant facts arises for consideration is that the appellants herein are engaged in manufacturing excisable goods falling under Chapter 28, 29 and 32 at the Central Excise Tariff Act, 1985. On scrutiny of Cenvat credit records and the relevant invoices maintained by the assessee for the period 2008- 09, it was noticed that the appellant had availed Cenvat credit of the duty paid on capital goods amounting to Rs. 1,04,558/- in respect of goods falling under Chapter 72 of the CETA on a conclusion that capital goods which are falling under Chapter 72 are ineligible for availment of Cenvat credit. Further scrutiny was taken up and found that the appellant had availed Cenvat credit on inputs like MS Steel Plates and various other goods. Show cause notice was issued demanding wrongly availed Cenvat credit along with interest and also with proposal for imposition of penalty. The appellant contested the show-cause notice before the Adjudicating Authority. The Adjudicating Authority after following due process of law confirmed interest thereof and also imposed penalty. Aggrieved by such an order, appellant preferred appeal before the First Appellate Authority. The First Appellate Authority also concurred with the view of the Adjudicating Authority and rejected the appeal filed by the assessee, hence this appeal.

Appellant Contentions:-The Appellant submits that the impugned order categorically records that the MS Plates which were procured by appellant on which credit was availed, was utilized by the appellant for fabrication of goods like Ducts, HA F, Chamber to Cyclone Ducting, New incinerator Chimney, 30 KL Vacuum Trap, Chloro Tank, Ducts for Chimney etc. It is his submission that these items are required for manufacturing final products, i.e. chemicals. He would submit that the appellant had produced certificate issued by Krishna Engineers, Government approved valuer in respect of use of HR, MS etc. and draws attention to the certificate Annexed at page 96.2, 117 of the Appeal Memo. He would submit that the issue in this case is now settled by judgment of the Hon'ble Supreme Court in the case of Rajasthan Spinning & Weaving Mills Ltd. [2010 (255) E.L.T. 481 (S.C.)] and judgment of the Hon'ble High Court of Rajasthan in the case of Hindustan Zinc Ltd. [2007 (214) E.L.T. 510 (Raj.)] and upheld by the Apex Court [2007 (214) E.L.T. A 115 (S.C.)], the decision of the Hon'ble High Court of Karnataka in the case of SLR Steels Ltd. [2012 (280) E.L.T.176 (Kar.)] and decision of the Principal bench of the Tribunal in the case of L.H. Sugar Factories Ltd. [2010(251) E.L.T.135(Tri.-Del.)
Respondent Contentions:-The Respondent would submit that the appellant in this case has not been able to justify his claim that the items manufactured from steel plates were used in factory of production. He relied upon the judgment of Larger Bench of Tribunal in case of Vandana Global [2010(253) E.L.T.440(Tri.- LB). He would submit that the lower authorities have recorded that these plates are used in repair and maintenance. As these plates are used for repair and maintenance, credit on duty paid is ineligible as per the judgment of Hon’ble High Court of Andhra Pradesh in the case of Sree Rayalaseema Hi-strength Hypo Ltd. [2012 (278) E.L.T.167(A.P.)]

Reasoning of Judgment:-We have considered the submission from both the parties and perused the record, we find that the appellant is aggrieved by the order of the First Appellante Authority for denial of Cenvat credit on MS Plates, HR Sheets etc. on the ground that these items fall under Chapter-72 and are not capital goods. It is found that the certificate issued by Chartered Engineers produced at page 94 & 117, clearly indicates that the MS Plates, HR Sheets etc. are utilized for fabrication of various parts of ducts for Chimney at their HAG plant. The Chartered Engineer’s certificate also indicates that the material is used for fabrication for new Chloro Tank etc.

As against such an evidence, Tribunal finds that the appellant authority has sought to justify his order of rejection of credit only on the ground that the Jurisdictional Assistant Commissioner has filed a report that the assessee had no record to justify their claim. Tribunal do not agree to such findings recorded by the First Appellante Authority. In Tribunal’s view, Rule 2(k) of the Cenvat Credit Rules, 2004 will come to the rescue of the appellant in this case, the decisions cited by the ld. Counsel would be directly applicable and it is to be held that the appellant herein is eligible to avail cenvat credit of the duty paid on the items i.e. MS Plates and HR Sheets, which according to Chartered Engineering’s certificate are mostly used for fabrication of machinery.

In view of the foregoing in the facts and circumstances of this case, it is found that the impugned order is unsustainable and accordingly the impugned order is set aside and appeal is allowed.

Decision:- Appeal allowed.

Comment:- The crux of this case appellant has taken cenvat credit of MS Plats, HR Sheet etc. for the fabrication of various parts of ducts for Chimney at their HAG plant that aid in the production of final products. Accordingly, cenvat credit was held to be rightly admissible.

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PJ-Case law-2013/14-1604

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