Capital Goods used for Fabricating Structural Support to Machinery used for Manufacturing Excisable Goods is Eligible to Avail CENVAT credit of Excise Duty: CESTAT [Read Order]

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the capital goods used for fabricating structural support to plant and machinery used for the manufacturing of excisable goods were eligible to avail of the CENVAT credit of excise duty. 

Nayara Energy Limited, the appellant assessee was an integrated huge petroleum plant engaged in the manufacture of Motor Sprits; High-Speed Diesel; Furnace Oil; Pet Coke; Superior Kerosene; LPG; etc. Welding Electrodes, Filler Wires, and Wire Fillers were used for the repair and maintenance of the plant and machinery. 

The assessee appealed against the order passed by the Commissioner of Central Excise for denying the CENVAT credit on the welding Electrodes, Wire FLR, Filler Wires, Welding Wire, and Wire Rope. 

Ramnath Prabhu and Dimple Gohil, the counsels for the assessee contended that the repair and maintenance activities are essential for smooth manufacturing operations without which manufacturing activity was not commercially feasible. 

Further submitted that the capital goods used for fabricating structural support to plant and machinery used for manufacturing excisable goods, CENVAT credit was admissible. 

Kalpesh P. Shah, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee’s use of the goods for repair and maintenance of plant and machinery cannot be considered to have been used ‘in or concerning the manufacture of final products’ as they are not used co-extensively with the process of manufacture of petroleum products and hence not integrally connected with the manufacture and CENVAT credit was not available to the assessee. 

The Bench observed that the Railway line material was used to move inputs/ raw material and manufactured goods within the factory premises and the movement of goods through the railway track was directly connected to the manufacture of the final product, therefore, the CENVAT credit cannot be denied. 

The two-member bench comprising Ramesh Nair (Judicial) and C.L Mahar (Technical) held that the assessee is entitled to the CENVAT credit on the goods manufactured by the assessee. 

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