The CESTAT held that assessee is entitled to Cenvat credit of inputs used for fabrication of capital goods or Plant and machinery.
The assessee/appellant is involved in the manufacture of TMT bars and MS billets. The Appellant is duly registered with the Department and clearing the finished goods on payment of appropriate excise duty. The appellant availed Cenvat credit on inputs, input services and capital goods under Cenvat Credit Rules, 2004 (CCR). On verification of records for the period from December 2005 to March 2010, it was observed by the Department that the Appellant has availed credit on MS items which appeared to revenue as ineligible credit availed on capital goods.
who certified the use of MS items in the manufacture of capital goods was addressed to furnish the documents on which the report was based. In reply, the Chartered Engineer stated that he issued certification after due verification of invoices and drawings furnished by the Assessee and they have not furnished any other documents. Further observed that the Certificate of Chartered Engineer is not flawless and only on verification of invoices and drawings only establishes the manufacture of capital goods in general, but it does not signify the manufacture of capital goods in question out of the same inputs in the absence of factory records. Thus, Deputy Commissioner found that Cenvat credit was not admissible in its entirety.
The assessee urged that readymade plant and machinery is not available for steel factories engaged in manufacture of TMT bars and MS billets. The same are fabricated at the site after procuring various inputs of iron, steel, etc., which fall under Chapter 72 & 73 of CETA. Such items are utilized in the factory premises for fabrication, inter alia, including processes like cutting, shaping, trimming and turning, without which the fabrication of such capital goods like furnace, rolling mill, support structures for furnace, control panel, trolley for transport of goods within the factory, cannot take place. The trolleys are moved on rails which are installed on the shop floor of the factory.
The court held that there is no case of any concealment, mis-statement or fraud on the part of the Appellant/assessee. We further find that as regards the capital goods fabricated out of the inputs, there is no allegation that such capital goods have been sourced from any other manufacturer by the Appellant/ assessee. We further find that under the facts and circumstances, the court below failed to consider the eligibility of Cenvat credit disputed as inputs, as defined in rule 2(K) of CCR.
CASE TITLE: MS Agarwal Foundries Pvt Ltd v/s Commissioner of customs