CENVAT Credit of Excise Duty Allowable on Input Service and Capital Goods used for Manufacture of HCFC [Read Order]

CENVAT credit is allowable on capital goods for the manufacture of high-carbon ferrochrome (HCFC). 

The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the CENVAT credit of excise duty allowance on input service and capital goods used for the manufacture of High Carbon Ferro Chrome (HCFC). 

Balasore Alloys Limited, the appellant assessee was a manufacturer of High Carbon Ferro Chrome (“HCFC”) falling under Tariff Item 72024100 of the Central Excise Tariff Act, 1985, at its factory at Balgopalpur and the assessee had been availing CENVAT credit on inputs, input services and capital goods and utilizing the same for payment of excise duty on clearance of HCFC from its factory and the manufacture of HCFC, Chrome Ore is the principle raw material. 

The assessee appealed against the order passed by the Commissioner, Central Excise Customs & Service Tax, Bhubaneswar for confirming the recovery of inadmissible CENVAT Credit of Rs.1,49,69,415/- availed on Input Services and Capital Goods. 

Joidip Basu, the counsel for the assessee contended that the assessee had filed a detailed reply refuting the allegations in the notice and contending that services and capital goods used at the mines and Chrome Ore Beneficiation Plant (COB) plant are captive and have direct nexus with the manufacturing process at the factory. 

S.S.Chattopadhyay, the counsel for the department contended that the credit of input services and capital goods installed at the COB Plant for the manufacture of the dutiable products was admissible only in the hands of COB Plant which is an independent entity and such credit cannot be availed by the factory, as per the CENVAT Credit Rules,2018. 

The Bench observed that the COB Plant was an integral part of the factory it had no separate legal identity the invoices were issued in the name of the assessee and credit was availed only once after payment of duty by the factory and CENVAT credit on capital goods would be admissible in the hands of the factory. 

The two-member bench comprising Muralidhar (Judicial) and Anpazhakan (Technical) held that the CENVAT credit allowable on the nature of goods being capital goods, its use in the manufacture of concentrated Ores which are ultimately used in the manufacture of dutiable final products i.e. HCFC. 

To Read the full text of the Order CLICK HERE

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