Custom, Excise & Service Tax Tribunal
M/S. Gestamp Sungwoo Automotive vs Commissioner Of Central Excise, ... on 2 February, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal No. E/116/2011
(Arising out of Order-in-Original No. 29/2010 dated 9.12.2010
passed by the Commissioner of Central Excise, Chennai IV)
M/s. Gestamp Sungwoo Automotive
(Chennai) Pvt. Ltd. Appellant
Vs.
Commissioner of Central Excise, Chennai IV Respondent
Appearance Shri T.S. Ramesh, Advocate for the Appellant Shri R. Subramaniyam, AC (AC) for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Date of Hearing / Decision: 02.02.2018 Final Order No. 40301 / 2018 Per B. Ravichandran, The appeal is against order dated 9.12.2010 of Commissioner of Central Excise, Chennai.
2. The appellants are engaged in the manufacture of automobile door parts liable to central excise duty. They were availing credit on various inputs, capital goods, and input services in terms of CENVAT Credit Rules, 2004.
3. The dispute in the present case relates to eligibility to take credit on Pallets, storage racks, conveyor system and certain steel tubes, angles and flats used to make steel cover of welding area for safety. The original authority denied the credit to the appellant on the ground that these are not capital goods for manufacture of their final products and some of the products like conveyor belt were classified under Chapter 73 and they were also immovable upon installation.
4. The ld. counsel appearing for the appellant submitted that the pallets and storage racks are intended for damage-free, safe storage of raw material, components, semi-finished goods or final products inside the factory. He has submitted photographs of the said items. These are essentially for safe storage before clearance or for further processing and are part of manufacturing process. Similarly, conveyor system is essential for material handling and movement of various items inside the factory. The supplier indicated the classification under Chapter 73 due to their understanding. In any case, the conveyor belt are specifically identified capital goods and they are essential in the manufacturing process. In the alternative this can be considered as inputs which are used in or in relation to the manufacture of final products. Regarding credit taken on steel tubes, angles, flats etc. it is submitted that these are used for fabricating the steel cover around high power welding machines as a safety measure. This is an essential industrial requirement. Accordingly, such fabrications are part of capital machinery.
5. We have heard both sides.
6. We have perused the photographs and examined the actual usage of various items credit on which was denied by the original authority. We are satisfied that the pallets and storage racks are essential items for safekeeping and further use of raw materials, components and semi-finished goods or finished goods before they are either processed or cleared out of factory. These can be considered as essential items involved in the manufacturing process. In this connection, we also refer to the decision of the Larger Bench of the Tribunal in the case of Banco Products (India) Ltd. Vs. Commissioner of Central Excise, Vadodara 2009 (235) ELT 636 (Tri. LB). There the Tribunal dealing with plastic crates used for material handling inside the factory allowed the credit on the same.
7. The conveyor belts are essential in the manufacturing process. The classification adopted by the supplier by itself will not decide the eligibility of the goods. The Honble Supreme Court in the case of Commissioner of Central Excise, Raipur Vs. Rajasthan Spinning & Weaving Mills Ltd. 2010 (255) ELT 481 (SC) examined the eligibility of credit on steel plates and MS channels following the user test evolved in Jawahar Mills 2001 (132) ELT 3 (SC) to determine the eligibility of the said product. In other words, it is the use of the product which will determine the eligibility rather than the nature of the product as it enters the factory. It is nobodys case that the conveyor belt is not connected to manufacturing process. We note that conveyor belts of their own are specifically classified as machinery, though in the present case, the supplier categorized it under Chapter 73. Even if the iron and steel items were made into conveyor belt inside the appellants premises, still such items will be eligible in view of the use to which they are put to. Similarly, we note that the steel tubes, angles and flats on which credit was availed were used to create a steel cover around welding machine for industrial safety. The operation of welding machine is connected to such safety measure. We find no reason for denial of credit for such essential fabrication inside the factory premises.
8. In view of the above discussion and analysis, we note that the denial of credit on these items are not justified. Accordingly, we set aside the impugned order and allow the appeal with consequential relief, if any.
(Dictated and pronounced in open court)
(B. RAVICHANDRAN) (SULEKHA BEEVI C.S.)
Member (Technical) Member (Judicial)
Rex
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