Whether credit can be available in respect of steel structure supporting items?

PJ/Case Law/2013-14/1863

Case:- COMMISSIONER OF C. EX., MADURAI VERSUS NALVETHA CAST STEELS P. LTD.

Citation:-2013 (294) E.L.T 127 (Tri.-Chennai)

Brief Facts:- The respondents have used MS angle, channels, plates, etc., for welding a structure on which overhead travelling cranes can be installed. They had claimed CENVAT credit in respect of the steel structural items. The same has been allowed by the lower appellate authority leading to this appeal by the Department. At the outset, it is noted that the lower appellant authority has allowed the appeal on merits and therefore has not gone into the issue of limitation.

Appellant Contentions:-In regard to the merits of the case, the learned SDR argues that the structure on which the overhead travelling crane is placed is not a part or component of the crane and hence no credit can be allowed in respect of the structurals, since it is not used for manufacturing any part of or component of any machinery. He draws support from the decision of the Larger Bench in the case of Vandana Global Ltd. v. CCE- 2010(253) E.L.T. 440 (Tri.LB) and the decision of the Hon’ble Supreme Court in case of Saraswati Sugar Mills v. CCE- 2011(270) E.L.T. 465 (S.C.).

Respondent Contentions:-The respondents supports the order of the lower appellant authority and states that since the description of the cranes according to the Tariff is “overhead travelling cranes on fixed support”, the support also forms part of the crane. This argument cannot be accepted. The Tariff is only distinguishing one kind of crane from the other and in this particular case, the reference is to an overhead travelling crane which is placed on fixed support and which travels on such support. It does not automatically mean that the support will also be part of the crane. For example, it cannot be anybody’s case that the railway track should be considered as part of the railway engine. As such, argument of the learned counsel which is also the basis of the decision of the lower appellate authority cannot be accepted.

Reasoning of Judgment:-We have considered the submission from both sides and perused the record, we find that the overhead travelling cranes are distinct products classified differently from the rails on which they move and the structures which support the rail. Hence applying the ratio of both Vandana Global (supra) and Saraswati Sugar Mills (Supra), it has to be held that the respondents do not have a case on merits. Accordingly, the impugned order is set aside and the Department’s appeal is allowed.
However, the lower appellate authority has not considered the limitation issue having allowed the appeal on merit. As such, the matter is remanded to the lower appellate authority to decide on the question of limitation after hearing both sides.

Decision:- The appeal is allowed.

Comment:-The essence of this case is that CENVAT credit cannot be availed in respect of steel structure supporting items based on the decisions of Vandana Global Ltd. v. CCE and Saraswati Sugar Mills. Hence, no CENVAT credit is allowed in respect of the structurals, since it is not used for manufacturing of any part or component of any machinery.

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PJ/Case Law/2013-14/1863

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