Cenvat Credit is permissible on Steel items used for setting up of Coal Washery Plant verified by the Lower Authorities: CESTAT [Read Order]

Cenvat Credit is permissible on steel items used for setting up of coal washery plant verified by the lower authorities, the Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held as above.

Shri Rajesh Sharma, Advocate appeared for the Appellant and Shri A.Roy, Authorized Representative appeared for the Respondent.

The Appellant, M/s. Shree Ganesh Metaliks Limited engaged in the manufacture of sponge iron falling under Chapter 72 of the Central Excise Tariff Act, 1985 having their factory in the state of Odisha. For the manufacture of the capital goods at the coal washery unit, they purchased 47.195 MT of iron and steel materials such as MS Angles, Channels, MS Flats, Plates, CR Coils etc. all falling under Chapter 72.

The Appellant manufactured specified capital goods such as a Hopper, Conveyor, components, accessories of Crushing machine and EOT Cranes, which are specified capital goods in terms of various sub-clauses of Rule 2(a)(A) of the Cenvat Credit Rules, 2004. The Adjudicating authority allowed the Cenvat credit amounting to Rs.1,90,555/- and disallowed Cenvat Credit amounting to Rs.6,535/-.

The Department filed an Appeal before the Commissioner(Appeals) and the Commissioner(Appeals) vide the impugned order, allowed the Department’s Appeal and disallowed Cenvat Credit amounting to Rs.1,97,090/-. The penalty of Rs.1,97,090/- under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 has also been imposed.

The Appellant submits that the impugned iron and steel goods are utilized by them for the manufacture of capital goods such as a Hopper, Conveyor, components, accessories of Crushing machine and EOT Cranes.

The single-member bench of Shri P K Choudhary, member(judicial) observed that the various steel items that have been used to set up of coal washery plant are also certified by the Chartered Engineer and have been duly verified by the lower authorities at the adjudication stage.

The Tribunal held that the assessee is entitled to avail Cenvat Credit on the steel items while the “user test” principle was applied. In light of various precedents, the bench set aside the impugned order and allowed the Appeal filed by the Appellant.

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