CESTAT Allows Cenvat Credit On Parts For Efficient Functioning Of Machine For Sugar Production

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed the cenvat credit on parts for the efficient functioning of machines for manufacturing.

The bench of Ajay Sharma (Judicial Member) has observed that the appellant is justified in availing the Cenvat credit on various items, namely, S.S. Welding Tube, Steel, Tubes, Alloy Steel Pipe, Prime HR Steel Coil, M.S. Wire, M.S. Slate, S.S. Welded Tube, HR Steel Pipe, and Link Outer, which are used in those machines that are manufacturing the final product.

The appellants/assessee are manufacturers of sugar and molasses and are availing themselves of Cenvat credit on inputs, capital goods, and input services under the provisions of the Cenvat Credit Rules, 2004. During the audit, it was noticed that they had availed themselves of Cenvat credit for central excise duty paid on items such as steel tubes, M.S. wire, S.S. welding tube, nickel screen, alloy steel pipes, H.R. steel pipe, sugar bag stacker chain, etc. as inputs.

According to the department, items are not inputs for the manufacture of sugar and molasses, and Cenvat credit is not admissible on items. Therefore, on being pointed out by the audit, the appellant reversed the amount via the Cenvat account, debit entry, and challan, respectively.

The appellant submits that steel tubes, M.S. wire, SS welding tube, alloy steel pipe, H.R. steel pipe, chain, M.S. slate, H.R. steel coil, link outer, etc. are all inputs/parts used in the various types of machinery being used by the appellant for manufacturing the final products. They are essential parts for the smooth and efficient functioning of the machinery used by the appellant for manufacturing sugar and molasses.

The appellant submitted that these are capital goods only and are not used for carrying out any type of construction or renovation work or for any permanent fixed structure.

The department submitted that the appellant has not produced any evidence to establish that the said goods are capital goods as per Rule 2(a) of the CCR, 2004.

The tribunal has held that no cogent evidence has been put forth by the department to show that these parts have been used for structural purposes. Therefore, in the absence of any evidence to the contrary, the claim made by the appellant cannot be denied.

Case Title: Vriddheshwar SSK Ltd. Versus The Commissioner of CGST & C.Ex

Citation: Excise Appeal No. 87385 of 2019

Date: 24.11.2022

Counsel For Appellant: Advocate Sagar Kulkarni

Counsel For Respondent: Supdt.(AR) P.K. Acharya

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