Rexon Strips Ltd. Vs Commissioner of CGST & Central Excise (CESTAT Kolkata)
In the case of Rexon Strips Ltd. vs. Commissioner of CGST & Central Excise, the CESTAT Kolkata ruled on the eligibility of CENVAT Credit for inputs used in capital goods. The appellant, engaged in manufacturing sponge iron, had claimed CENVAT Credit of ₹7.49 crore on materials like MS angles, channels, joists, and plates used for fabricating capital goods such as conveyor systems, furnaces, and storage hoppers. The Adjudicating Authority, citing the Vandana Global Ltd. decision, denied the credit, arguing that these materials were used for construction and supporting structures rather than manufacturing. The Commissioner (Appeals) partially overturned the decision by allowing credit for welding electrodes but upheld the disallowance for other materials.
Rexon Strips Ltd. appealed to CESTAT, contending that the materials were integral to capital goods and relied on precedents such as Thiru Arooran Sugars v. CESTAT Chennai and Mundra Ports & SEZ Ltd. v. CCE. The tribunal found no dispute regarding the actual usage of materials in capital goods and noted that the Chartered Engineer’s certificate supported their claim. It also observed that similar demands across India had been set aside when reviewed by higher courts. Based on established legal precedents, CESTAT overruled the prior decisions and allowed the CENVAT Credit, affirming that materials used in capital goods qualify as inputs under Rule 2(k) of the CENVAT Credit Rules, 2004. The ruling enables Rexon Strips Ltd. to claim consequential relief as per law.
