2016 (10) TMI 1183 - AT - Central Excise

CENVAT credit - whether the appellant is entitled to avail cenvat credit paid on various iron and steel items like MS Round, MS angles, Steel Strappings, etc., which stand used in the repair and maintenance of plant and machinery? - Held that - the said issue stands settled in the appellant s own case M/s Hindustan Copper Ltd. Versus C.C.E. & S.T. - Jaipur-I 2015 (5) TMI 1149 - CESTAT NEW DELHI , where it was held that the items are cenvatable - appeal allowed. CENVAT credit - steel scrapers, which is used for packing materials - Held that - The Hon ble High Court of Madras in the case of Nilkamal Ltd. Vs. CESTAT, Chennai 2016 (5) TMI 305 - MADRAS HIGH COURT has observed that the definition of the word input is very wide and includes all the goods, which are used in or in relation to the manufacture of final products. The same includes the goods, which are used directly or indirectly irrespective of whether those goods are contained in the final product or not and it includes accessories of final products cleared along with the final product - There is no doubt in the present case that steel strappings are used for packing the final products of the appellants, in which case they would be cenvatable - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Entitlement to avail cenvat credit on iron and steel items used in repair and maintenance of plant and machinery.
2. Denial of credit on steel scrapers used for packing materials for final product.

Analysis:

Issue 1:
The first issue revolves around the entitlement of the appellant to avail cenvat credit on iron and steel items utilized in the repair and maintenance of plant and machinery. The judgment refers to a previous Final Order (No. 52998/2015) which had already settled the aspect of these items being cenvatable. Citing this precedent, the Member (Judicial) allows the appeal on this issue, thereby affirming the appellant's right to claim cenvat credit on items like MS Round, MS angles, and Steel Strappings used in plant and machinery repair and maintenance.

Issue 2:
The second issue pertains to the denial of credit on steel scrapers used as packing materials for the appellant's final product. The judgment draws attention to a ruling by the Hon'ble High Court of Madras in the case of Nilkamal Ltd. Vs. CESTAT, Chennai [2016 (335) ELT 220 (Mad.)], which elucidated the broad definition of the term 'input' encompassing all goods used in or in relation to the manufacture of final products. This definition includes goods used directly or indirectly, regardless of their presence in the final product, and extends to accessories of final products cleared along with the final product. The High Court's stance on the cenvatability of packing materials, including the observation that final products cleared with packing materials are eligible for credit on the packing materials, is cited. Given that steel strappings are utilized for packing the appellant's final products, they are deemed cenvatable in line with the legal pronouncement by the Hon'ble Madras High Court.

In conclusion, the judgment rules in favor of the appellant on both issues discussed. The impugned order is set aside, and the appeal is allowed with consequential relief granted to the appellant.