CESTAT grants Credit to Steel items used for setting up Sponge Iron Plant [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), granted credit to steel items used for setting up Sponge Iron Plant.

The Appellant, M/s. Vishal Metallics Private Limited is engaged in the manufacture of Sponge Iron. The Show Cause Notice was issued alleging that the Appellant had availed irregular and inadmissible CENVAT Credit of Rs.5,51,616 during the period April,2008 to March,2009 on the Iron and Steel materials which are purportedly utilized for manufacture of supporting structures.

The Additional Commissioner partially allowed CENVAT Credit of Rs.2,94,267 on 75.930 MT of Iron and Steel materials. On appeal, the Commissioner (Appeals)upheld the adjudication order and rejected the Appeal. Hence the present Appeal has been preferred before the Tribunal.

The Counsel, appearing on behalf of the Appellant, has submitted that the Appellant has duly furnished the utilisation statement showing their usage of steel items to manufacture various goods which become integral part of the plant to manufacture the final product.

The Counsel relied on various decisions of the High Court to support the credit entitlement on the principles of ‘user test’ and also submitted that the Commissioner (Appeals) has completely ignored the utilisation statement and has merely relied on the decision of the Tribunal’s Larger Bench in the case of Vandana Global which decision has already been set aside by the Chhattisgarh High Court.

A Single Bench consisting of P K Choudhary, Judicial Member held that “In the facts of the present case, it is not in dispute that various steel items have been used for the purpose of setting up of Sponge Iron Plant for manufacture of final products. Therefore, by applying the “user test” principle, the Appellant is entitled to avail credit on the steel items.”

K. Kurmy, appeared for the Appellant and S. Mukhopadhyay, appeared for the Respondent.

To Read the full text of the Order CLICK HERE

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