CESTAT allows Cenvat Credit on Parts for efficient functioning of Machine for Manufacturing Sugar and Molasses [Read Order]

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed Cenvat Credit on parts for efficient functioning of machine for manufacturing Sugar and Molasses.

The appeal has been filed by the appellant, Vriddheshwar SSK Ltd assailing the order by which the Commissioner (Appeal) partly allowed the appeal filed by the appellant and reduced the inadmissible Cenvat credit to Rupees two lakhs along with penalty by allowing Cenvat credit on Nickle Screen and sugar bag stacker.

The Cenvat credit was rejected for S.S. Welding Tube, Steel, Tubes, Alloy Steel Pipe, Prime HR Steel Coil, M.S.Wire, M.S.Slate, S.S. Welded tube, H.R. Steel pipe, Link Outer etc which, according to the Commissioner, appear to be structural items of general use and cannot be considered as capital goods in terms of Rule 2(a) Cenvat Credit Rules (CCR), 2004 and also that such items are generally used for structures providing support to capital goods which are clearly excluded from the definition of capital goods.

The issue to be decided is whether the appellant, who is manufacturing sugar and molasses, is justified in availing the Cenvat credit on various items like S.S. Welding Tube, Steel, Tubes, Alloy Steel Pipe, Prime HR Steel Coil, M.S.Wire, M.S.Slate, S.S. Welded tube, H.R. Steel pipe, Link Outer which, according to them, have been used in those machines which are manufacturing the final product.

The Counsel for the appellant submitted that Steel tubes, M.S. Wire, SS Welding Tube, Alloy Steel, Pipe, H.R. Steel Pipe, chain, M.S. Slate, H.R. Steel Coil, Link outer etc. are all inputs used in the various machineries being used by the appellant for manufacturing their final products i.e. Sugar and Molasses and they are essential parts for smooth and efficient functioning of the machinery used for manufacturing.

The Counsel for the Revenue submitted that the appellant has not produced any evidence to establish that the said goods are capital goods as per Rule 2(a), CCR, 2004 and prayed for dismissal of the appeal filed by the appellant.

A Bench consisting of Ajay Sharma, Judicial Member observed that “The parts in issue herein have been used for smooth and efficient functioning of the machinery which has been used for manufacturing Sugar and Molasses and therefore there is no reason not to allow the credit in issue to the Appellants.”

To Read the full text of the Order CLICK HERE

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