Chennai bench of Custom, Excise & Service Tax Appellate Tribunal in the case of Thiru Arooran Sugars Ltd versus Commissioner of Central Excise while setting aside the impugned order of Revenue ruled that Assessee eligible for Cenvat Credit on MS items used for structural supports.
In instant case Assessee engaged in the manufacturing of sugar, molasses, rectified spirit etc. and were availing the Cenvat Credit on capital goods or inputs used in their factory. During the verification, it appeared that Assessee availing the credit on MS items like H.R. Plates, H.R. Sheets, M.S. Channels, M.S. Joists etc. used as structural items in their factory.
Consequently, the department held that these items would fall under Chapter 72 and are not covered by the definition of capital goods under Rule 2 of Cenvat Credit Rules, 2004. Accordingly, these items cannot be considered as inputs for the manufacture of capital goods.
Show cause proceedings were initiated for the different periods under dispute in order to disallow the credit and for recovery of the same along with interest. Original Authority confirmed the demand along with interest and penalty. But on appeal Commissioner (Appeals) upheld the demand but however set aside the penalty.
Being aggrieved with the said order Assessee approached Chennai bench of CESTAT and contested the same before the tribunal. Ms.Cyunduja Crishnan and K.P. Muralidharan appeared at the request of Assessee and Revenue respectively.
Advocate for Assessee submitted that the credit availed certain items were used for fabrication of structural supports of capital goods and the same was used for keeping the machinery of the factory in good working condition.
The Revenue on counterpart denied the credit contending that after fixing to the earth these support structures become immovable property as already mentioned in the case of Vandana Global Ltd. Vs. CCE.
The Advocate for Assessee also pressed assessee’s own case wherein High Court held that credit on such items is allowed since the same used for fabrication of supporting structures; that the period involved is prior to 07.07.2009 has a retrospective effect on the same.
Finally, the tribunal after considering this all held that disallowance of credit is unjustified and allowed the appeal of Assessee.
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