Whether the cenvat credit on the rejected PSC Sleepers used in the final product is admissible?

PJ/CASE LAW/2016-17/3200

Case-PARTHA ISPAT (INDIA) PVT. LTD. Versus COMMISSIONER OF C. EX. & S.T., RANCHI

Citation-2016 (337) E.L.T. 287 (Tri. - Kolkata)

Brief Facts-This appeal is filed against Order-in-Appeal No. 06/RAN/2012, dated 24-1-2012 passed by Commissioner of Central Excise (Appeals) & S. Tax, Ranchi.
Briefly stated the facts of the case are that the appellants are engaged in the manufacture of Pig Iron and S.G. Inserts. During the period from June, 2008 to July, 2008, the appellant had availed Cenvat credit on the rejected PSC Sleepers claiming the same as “input” meant to be used in or in relation to the manufacture of their finished goods. The said rejected PSC Sleepers are broken and after removing the concrete and cement portion from the said PSC Sleepers, the iron wire and inserts are extracted and used in or in relation to the Pig Iron and S.G. Inserts. The demand has been confirmed and penalty imposed on the ground that since the rejected PSC Sleepers as a whole were not used in or in relation to the manufacture of their finished products, accordingly, Cenvat credit is not admissible to them. Aggrieved by the said order, the appellant preferred an appeal before the ld. Commissioner (Appeals), who dismissed the appeal and confirmed the adjudication order. Hence, the present appeal.

Appelants Contention-The ld. Advocate, appearing for the appellant, submits that the usable portion of PSC Sleepers i.e. wire and inserts are used in the manufacture of Pig Iron and S.G. Inserts, therefore, the condition of use of input in or in relation to the manufacture of finished goods as laid down under the definition of “input” at Rule 2(k) of the Cenvat Credit Rules, 2004, is satisfied. Therefore, denial of Cenvat credit on the PSC Sleepers is incorrect.

Respondents Contention-The ld. AR appearing for the Revenue, has reiterated the findings of the ld. Commissioner (Appeals).

Reasoning Of Judgement-Heard both sides and perused the records. On going through the impugned order, tribunal find that the ld. Commissioner (Appeals) while upholding the Order-in-Original, has held that a little portion of the said PSC Sleepers used in the manufacture of. They do not find any merit in the said observation inasmuch as the definition of “input” and other conditions laid down under the Cenvat Credit Rules, 2004, makes it abundantly clear that to be eligible to Cenvat credit, the input must be used in or in relation to the manufacture of finished goods. Once the inputs have been used in or in relation to the manufacture of finished products, the appellants are eligible to the credit. There is no allegation in the show cause notice nor any finding in the impugned order that the wires and inserts retrieved/extracted out of breaking of the rejected PSC Sleepers, had not been used in or in relation to the manufacture of Pig Iron and S.G. Inserts and the same were cleared without payment of duty. In these premises, therefore, tribunal do not find any merit in the impugned order. Consequently, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law.

Decision-Appeal allowed

Comment-The credit was sought to be denied on the grounds that the inputs namely PSC Sleeperswere not ‘wholly/fully/completely used’ for manufacture of final products. It was alleged that the Rejected PSC Sleepers were broken and after removing the concrete and cement portion, the iron wire and inserts were extracted and the same were used in or in relation to the Pig Iron and S.G. Inserts which is the final product. Tribunal has allowed the credit on the said PSC Sleepers on the grounds that there is no condition in the Cenvat Credit Rules, 2004 which states that the inputs should be wholly or totally used in manufacture of final products. Further, there was no allegation in the show cause notice that the iron wires and inserts extracted from PSC sleepers are not used in the manufacture of final products. It was held that so long as the usable part of the inputs is used in the manufacture of final products; the credit will be allowed on the said inputs.

Prepared By-Neelam Jain

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PJ/CASE LAW/2016-17/3200

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