2010 (10) TMI 994 - AT - Central Excise

Summary

Issues involved:
The appeal challenges the denial of CENVAT credit on a pre-fabricated cold room used in the manufacturing of ice-cream, based on the classification of the cold room as not falling under the definition of 'capital goods' u/s Rule 2(b) of the CENVAT Credit Rules, 2004. Additionally, the issue of the time limitation for raising the demand on the CENVAT credit availed by the appellants is contested.

Summary:

Issue 1: Classification of cold room as 'capital goods' for CENVAT credit:
- The appellants, ice-cream manufacturers, availed CENVAT credit on a pre-fabricated cold room used for freezing ice-cream at -20 to -40 degrees Celsius.
- Show-Cause Notice was issued invoking extended time for denial of credit, contending that the cold room does not qualify as 'capital goods.'
- Adjudicating authority initially allowed the credit based on its use in the manufacturing process, citing a Supreme Court judgment.
- Revenue appealed to the Commissioner (Appeals) who overturned the decision, leading to the current appeal.
- Appellants argued that the cold room is essential for their manufacturing process and should be considered 'capital goods,' referencing a relevant case law.
- The dispute primarily revolves around the classification of the cold room and its eligibility for CENVAT credit.

Issue 2: Time limitation for raising demand on CENVAT credit:
- The appellants raised the defense that the demand on the CENVAT credit availed in February & March 2004 is time-barred.
- They highlighted that the audit conducted by Revenue authorities in 2004 did not raise any queries regarding the credit availed on the cold room.
- The audit, supervised by the Commissioner of Central Excise, accepted the correctness of the credit availed during the relevant period.
- The appellant's argument that the demand raised in 2007 is beyond the statutory time limit is upheld, leading to the setting aside of the impugned order based on the issue of limitation.
- The decision on the merits of the case was not recorded due to the resolution of the appeal on the limitation issue.

In conclusion, the appeal was allowed based on the finding that the demand on the CENVAT credit availed by the appellants was time-barred, as supported by the audit conducted by Revenue authorities during the relevant period. The classification of the cold room as 'capital goods' for CENVAT credit remains a key point of contention in the case.