2008 (9) TMI 841 - AT - Central Excise

Summary

Issues: Appeal against Order-in-Appeal regarding Cenvat credit on molasses, time-barred show cause notice, entitlement for Cenvat credit on inputs, definition of "inputs" under Rule 2 of Cenvat Credit Rules.

Analysis:
1. The appeal was filed against the Order-in-Appeal challenging the denial of Cenvat credit on molasses by the Commissioner of Customs and Central Excise. The appellants, sugar and molasses manufacturers, contended that they were entitled to the credit. The issue of the show cause notice being time-barred was raised, as the notice was issued on 17-5-2004 for the period from 15-12-2000 to 13-3-2001. The appellants argued that the notice was not issued within the prescribed one-year period after the Department obtained the relevant information on 7-1-2002, thus no suppression of facts occurred.

2. The learned Advocate for the appellants cited precedents to support their claim, emphasizing that items used for assembling immovable property are eligible for Cenvat credit. They referenced cases such as Commissioner of Central Excise, Hyderabad v. Nava Bharat Ferro Alloys Ltd. and Devan Sugars Ltd. v. CCE, Meerut to strengthen their argument regarding the entitlement to credit on inputs like steel rods used in manufacturing molasses.

3. On the other hand, the Departmental Representative relied on a previous decision involving Heat recovery Steam Generator to support the denial of credit, stating that certain items embedded in immovable property are not excisable. However, upon careful consideration, the Tribunal analyzed Rule 2 of the Cenvat Credit Rules, particularly the definition of "inputs." The Rule specifies that goods used in the manufacture of capital goods within the factory are considered inputs. In this case, the steel rods used in fabricating molasses storage tanks, which are essential for manufacturing excisable goods in the sugar factory, were deemed as inputs eligible for credit. Consequently, the impugned order was set aside, and the appeal was allowed with any necessary consequential relief.

4. The Tribunal's decision was based on a thorough examination of the definition of "inputs" under the Cenvat Credit Rules, concluding that materials used in the production of capital goods within the factory are considered inputs eligible for credit. This interpretation aligned with the appellants' argument and the precedents cited, ultimately leading to the setting aside of the impugned order and the allowance of the appeal.