Eligibility of credit on M.S. Plates, Angles used for repair and maintenance of the plan t and machinery.

PJ/Case law/2013-14/1887

Case:-SHAHABAD CO-OP. SUGAR MILLS LTD. Vs COMMR. OF C. EX., PANCHKULA

Citation:-2013 (291) E.L.T. 583 (Tri. - Del.)

Brief Facts:-The point of dispute in this appeal is as to whether M.S. Plates, M.S. Angles & Joist, HR sheets etc. used in the factory by the appellant for repair and maintenance of the plants and machinery for replacement of worn out parts or for fabrication of structures and machinery used in production of sugar and molasses are eligible for Cenvat credit as inputs or capital goods. Initially this issue had been decided in favour of the appellant by the Jurisdictional Assistant Commissioner vide order-in-original dated 12-5-2004. This order, of Assistant Commissioner was challenged by the department before the Commissioner (Appeals) and the Commissioner (Appeals) vide order-in-appeal dated 23-12-2005 set aside the Assistant Commissioner’s order and disallowed the credit and confirmed the Cenvat credit demand. Against this order, the appellant filed an appeal before the Tribunal, which was disposed of by Final Order No. 393/2008-SM (BR), dated 29-1-2008 by which the matter was remanded to the Commissioner (Appeals) for de novo decision after examining the use of these items and also the case laws cited by the learned advocate - which included the judgment of Hon’ble Rajasthan High Court in the case of Union of India v. Hindustan Zinc Ltd. reported in 2007 (214)E.L.T. 510 (Raj.). In course of de novo proceedings, the Commissioner (Appeals) vide order-in-original dated 23-1-2009 again disallowed the credit on these items observing that the same are not covered by the definition of capital goods and are used for fabrication of structures. Against this order of the Commissioner (Appeals), the present appeal has been filed.

Appellant Contentions:-The appellant pleaded that the items, in question, are used either for repair and maintenance of the plants and machinery and for fabrication of machinery parts or fabrication of structures which are used with the machines, that none of these items are used for foundation or any supporting structure, that the statement dated 25-2-2004 of Shri Rajiv Juneja, Accountant of the appellant firm has been misconstrued by the Commissioner (Appeals), that since the items, in question, are used either for fabrication of parts of capital goods or for repair and maintenance, the same are eligible for Cenvat credit and in this regard he relies upon the judgment of Union of India v. Hindustan Zinc Ltd. (supra), wherein it was held that M.S./S.S. Plates used in the workshop for repair and maintenance of plants and machinery which is used in the manufacture of final product are eligible for Cenvat credit, that same view has been taken in the case of CCE, Salem v.India Cements Ltd. reported in 2006 (199)E.L.T. 75 (Tri.-Chennai), and that in view of this, the impugned order is not correct.

Respondent Contentions:-The respondent defended the impugned order by reiterating the Commissioner findings in the impugned order and pleaded that the items, in question, have been mainly used for fabrication of structures, which have been used as supporting structures and, hence, in view of Larger Bench of the Tribunal in the case of Vandana Global Ltd. v. CCE, Raipur reported in 2010 (253)E.L.T. 440 (Tri. - LB), the Cenvat credit would not be available. He, therefore, pleaded that as such there is no infirmity in the impugned order.

Reasoning of Judgement:-It was found by the Tribunal that for arriving at the conclusion that the items, in question, have been used for fabrication of supporting structure, the statement of Shri Rajiv Juneja of the appellant-company has been relied. However, on going through his statement, in his statement nowhere stated that the Angles, Channels, Plates, Steel Wires etc. had been used for fabrication of supporting structures. There is no mention in this statement that the structures referred to are the supporting structures for the machinery. When these items are used for fabrication of various machinery or their parts, the same would be covered by the definition of ‘input’ and would be eligible for Cenvat credit. When these items are used for repair and maintenance of plant and machinery, the Cenvat credit would be admissible in respect of these, in view of judgment of Hon’ble Rajasthan High Court in the case of Union of India v. Hindustan Zinc Ltd. (supra), and of the Tribunal in the case of CCE, Salem v. India Cements Ltd. (supra) wherein it has been held that M.S./S.S. Plates used for repair and maintenance of the machinery, which is used for manufacture of final product would be eligible for Cenvat credit. Though, the Commissioner (Appeals) in the impugned order has observed that the judgment of Hon’ble Rajasthan High Court in the case of Union of India v. Hindustan Zinc Ltd. (supra), is not applicable no reasons for the same have been given. In view of this, the impugned order disallowing the Cenvat credit in respect of H.R. Sheets, M.S. Plates etc. used for repair and maintenance or for fabrication of machines and parts thereof is not sustainable. The same is set aside.
Decision:-Appeal allowed.

Comment:-The essence of this case is that the credit of excise duty paid on MS plates, angles, channels etc. used in the fabrication of parts of plant and machinery and in their repair and maintenance is admissible in view of the Rajasthan High Court judgement in the case of Hindustan Zinc Ltd.

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PJ/Case law/2013-14/1887

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