In a landmark order, the Customs, Excise & Service Tax Appellate Tribunal (Cestat) has held that a steel plant is entitled to take credit of duty paid on numerous inputs that are used to manufacture machinery parts within the plant, even though such parts attract no duty, since the parts are capital goods ultimately used in the manufacture of dutiable iron and steel products.
The tribunal, in the same order, also extended exemption to similar inputs manufactured by the steel plant and used in-house to make machinery parts. However, it held that credit of duty cannot be allowed in respect of items like welding electrodes and acetylene gas that are used in the repair and maintenance of machinery, since these inputs do not directly participate in the actual production of the dutiable finished products. The Cestat?s east zonal bench handed down this ruling while clubbing 44 appeals of the Bokaro Steel Plant of Steel Authority of India Ltd (SAIL) during a circuit bench held at Jharkhand?s capital Ranchi last month. The Cestat?s east zonal bench, has already disposed of over 1,500 appeals here during the six-seven months that it has been functioning after being reconstituted.
