2008 (1) TMI 724 - AT - Central Excise

Summary

Issues involved: Interpretation of circulars u/s C.B.E.C. Circular F. No. B-4/7/2000-TRU, dated 3-4-2000 and subsequent circular of 2006 regarding Cenvat credit on capital goods.

Summary:

Issue 1: Interpretation of C.B.E.C. Circular F. No. B-4/7/2000-TRU, dated 3-4-2000
The Appellate Tribunal CESTAT, Mumbai heard an appeal by the Revenue against the Commissioner (Appeals) order regarding the eligibility of assessees to take 50% balance credit in the year 2002-03 before the installation of capital goods. The Tribunal referred to Circular F. No. B-4/7/2000-TRU, dated 3-4-2000, which clarified that Cenvat credit for capital goods can be taken upon receipt, not necessarily upon installation. The circular specified that 50% credit could be availed in the financial year 2000-2001. The Tribunal found that the assessees had followed this circular by initially taking 50% credit and the remaining 50% in the subsequent financial year. It was emphasized that such circulars are binding on the Revenue, as per the decision in Suchitra Components Ltd. v. CCE, Guntur, 2007. The Tribunal held that the subsequent circular of 2006, requiring installation before availing the balance credit, could not be applied retrospectively as it was deemed oppressive, contrasting with the beneficial nature of the 2000 circular.

Issue 2: Admissibility of Cenvat credit without installation of capital goods
The Tribunal, based on the interpretation of the circulars, decided not to delve into the question of whether credit is admissible only after the installation of capital goods. Upholding the impugned order, the Tribunal rejected the Revenue's appeal and disposed of the cross-objection filed by the respondents accordingly.

This judgment highlights the significance of following circulars issued by the C.B.E.C. in determining the admissibility of Cenvat credit on capital goods, emphasizing the binding nature of beneficial circulars and the prospective application of oppressive circulars.