2024 (2) TMI 1515 - AT - Central Excise

CENVAT Credit - inputs as per Rule 2(k) of the Cenvat Credit Rules 2004 - channels angles joists plates coils and welding electrodes - HELD THAT - The items have been used in the conveyor system iron ore silo furnace gratings induration furnace furnace duct product storage hopper etc. There is no dispute that these are all essential capital goods which are required for carrying out the manufacturing process. From paragraph 15 of the Order-in-Original it is found that the appellant has provided a certificate from the Chartered Engineer as to how the inputs have been utilized in fabrication of the capital goods or for making the structures for capital goods. Therefore the usage of the goods in question is not in dispute. During the period under consideration several proceedings were initiated throughout India based on the basis of Larger Bench decision in the case of Vandana Global 2010 (4) TMI 133 - CESTAT NEW DELHI (LB) . When these proceedings reached the Tribunal or High Court stage all such demands were set aside and the appeals filed by the appellants have been allowed. Conclusion - The inputs used for supporting plant and machinery should be considered integral parts of the capital goods making the appellant eligible for CENVAT Credit. Credit allowed - appeal allowed.

Summary

The Appellate Tribunal considered the issue of eligibility for CENVAT Credit on various inputs used in the fabrication and commissioning of capital goods by the appellant, who is engaged in the manufacture of Sponge Iron. The core legal question was whether the inputs procured by the appellant, such as channels, angles, joists, plates, coils, and welding electrodes, qualified for CENVAT Credit under the Cenvat Credit Rules, 2004.The Tribunal analyzed the appellant's claim for CENVAT Credit in light of the decision of the Larger Bench in Vandana Global Limited, which held that certain items used for construction purposes may not qualify as inputs under Rule 2(k) of the Cenvat Credit Rules. The Adjudicating Authority initially denied the CENVAT Credit based on this interpretation, stating that many of the items were used for fabrication of supporting structures. The Commissioner (Appeals) partially allowed the credit on welding electrodes but confirmed the denial of credit on other inputs.The appellant argued that the inputs were either directly used in the manufacture of capital goods or in making supporting structures for the capital goods. They relied on the case law of Thiru Aroran Sugars and Mundra Ports and Special Economic Zone Ltd. to support their claim that inputs used in supporting structures for plant and machinery are eligible for CENVAT Credit.After considering the submissions and evidence presented by both parties, the Tribunal found that the appellant had provided detailed certificates from a Chartered Engineer demonstrating the utilization of the inputs in the fabrication of capital goods or supporting structures. The Tribunal noted that similar demands based on the Vandana Global decision had been set aside in other proceedings across India.The Tribunal examined a table provided by the Adjudicating Authority, showing the usage of the inputs in various capital goods such as conveyor systems, furnace gratings, and product storage hoppers. They concluded that the inputs were essential for the manufacturing process and fell within the scope of Rule 2(a)(A) and 2(k) of the 2004 Rules.Referring to the decisions of Thiru Arooran Sugars and Mundra Ports, the Tribunal held that the inputs used for supporting plant and machinery should be considered integral parts of the capital goods, making the appellant eligible for CENVAT Credit. They set aside the impugned order and allowed the appeal on merits, granting the appellant consequential relief as per the law.In conclusion, the Tribunal ruled in favor of the appellant, recognizing the eligibility of the inputs for CENVAT Credit based on their use in the fabrication of capital goods and supporting structures. The decision was pronounced on 11th February 2025.