Order Date – 15 September 2022

Facts –

• The appellant, Bharathi Cement Corporation Pvt Ltd., filed an appeal against demand of reversal of Cenvat credit availed on inputs and input services during the period from July 2009 to February 2010, under Rule 14 of CCR read with Section 11A of the Central Excise Act, 1944 and imposition of penalty equal to the duty demanded under Rule 15 of the Cenvat Credit Rules vide show cause notice dt.30.7.2010.
• The demand was made vide the impugned order on the following grounds:

1. Availment of input tax credit on input services such as erection and commissioning etc., used at the time of construction of factory is incorrect, since they were used for manufacture of capital goods which had become immovable after manufacture, and also as such, exempted from duty vide Notification No.67/95-CE dt.16.3.1995.
2. Cenvat credit is not allowed on dumpers used for transportation of ore from captive mines to the plant, as they fall under Chapter 87 and thus, excluded from the definition of the term ‘capital goods’ under Rule 2(a)(A) of CCR.
3. The welding electrodes and MS Rolla Deck Sheet used for fabrication-erection and for repairs of machinery have individual classification and cannot be treated as components, spares and accessories of any capital goods and hence, not eligible for credit as capital goods and also not even as inputs.

Issues –

• Whether the appeal against demand of reversal of Cenvat credit availed on inputs and input services be allowed or not?

Order –

• The Tribunal observed in the first issue regarding the availment of input services for setting up of the factory, that the said issue is already settled in favour of the appellant vide Final Order dated 20 June 2017, in appellant’s own case by a coordinate bench of this Tribunal.
• The Tribunal in the second issue regarding the Cenvat credit on dumpers, observed that these are part of the material handling system, as such dumpers are used by the appellant for transferring the raw material (limestone) from the pit head to the crusher. The Tribunal held that the issue stands covered in favour of the appellant by the Precedent order of this Tribunal in Aditya Cement Vs CCE, Jaipur [2017(346) ELT 300(Tri-Del)].
• The Tribunal in the third issue regarding availment of Cenvat credit on welding electrodes, welding machine and MS Rolla Deck profile sheet as capital goods, observed that cenvat credit on these items is allowable as inputs under Rule 2(k) as without the use of welding electrodes and welding machine no fabrication and repair and maintenance of plant and machinery is possible. In absence of such inputs, production of dutiable output is not possible.  Thus, there is indirect use of these items in the manufacture of dutiable output. Similarly, the profile sheets are also required for use in fabrication of plant and machinery, for setting up of the factory.  Thus, the Tribunal held that credit is available.
• Hence, the Tribunal allowed the appeal with consequential relief.