Goods Used In Fabrication Of Structures Embedded To Earth To Be Treated As 'Inputs': CESTAT Allows Cenvat Credit To SAIL

The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has allowed the cenvat credit to the Steel Authority of India Limited (SAIL).

The bench of R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical Member) has observed that the 'plates' used for the fabrication of capital goods are inputs for the capital goods, and hence they are eligible for the credit availed on the 'plates' as 'inputs'.

The appellant/assessee, SAIL, is in the business of manufacturing iron and steel products. The appellant cleared excisable goods manufactured by it on payment of excise duty leviable thereon by utilizing CENVAT credit for inputs, capital goods, and input services in accordance with the CENVAT Credit Rules, 2004.

The appellant procured various structural steel items (plates falling under Chapters 69, 72, 73, 84, and 85) as part of the modernization of the plant as well as their existing unit. These 'plates' were used for the fabrication of capital goods (mills, conveyors, belts, pipelines, storage tanks, coke ovens, continuous casting plants, coke oven gas plants, pollution control equipment, storage tanks, etc.) or parts, components, and accessories thereof to be used inside the plant premise for manufacturing excisable goods.

The appellant availed CENVAT credit on the plates. The appellant was issued an SCN proposing to deny credit availed on plates during the underlying period by alleging that the plates are neither capital goods nor inputs.

On adjudication, the Commissioner has confirmed the demand for ineligible Cenvat credit amounting to Rs. 1,54,11,925, along with interest and penalty.

The assessee contended that the order has erroneously held that the 'plates' are used in factory sheds, construction of building foundations, etc., summarily dismissing the CE certificate furnished by the appellant. The CE certificate ought to have been accepted as conclusive evidence to establish the end use of the remaining goods. In the absence of any contradictory evidence in the impugned order, the certificate ought not have been brushed aside.

The appellant submitted that the term 'inputs' is defined under Rule 2(k) of the CCR, 2004. The term 'inputs' has wide coverage and practically includes all goods used in the manufacture of final products.

The tribunal held that where any particular process is integrally connected, without which manufacturing is not viable, then the goods that are used will be eligible for credit.

The CESTAT has held that the demand confirmed in the order is not sustainable. Since the demand itself is not sustainable, the question of demanding interest or imposing a penalty does not arise.

Counsel For Appellant: Payal Bharwani

Counsel For Respondent: S. Mukhopadhyay

Case Title: M/s Steel Authority of India Limited Versus Commissioner of CGST & Central Excise, Bolpur

Case No.: Excise Appeal No. 75458 of 2016

Click Here To Read The Order