2010 (9) TMI 1036 - AT - Central Excise

Issues Involved:
1. Disallowance of Cenvat credit on materials and capital goods used for erection and commissioning of a paint shop.
2. Classification of equipment and machinery as immovable assets.
3. Applicability of extended period of limitation due to alleged suppression of facts.
4. Divergent views on availability of credit and their impact on the case.
5. Prima facie case for stay of the impugned order.

Detailed Analysis:

1. Disallowance of Cenvat Credit:
The appellants challenged the disallowance of Cenvat credit amounting to Rs. 28,98,904/- on materials and capital goods used for the erection and commissioning of a paint shop. The Additional Commissioner had ordered the recovery of the credit along with interest and a penalty of an equal amount. The appellants argued that the machinery was fixed to the ground only to prevent vibration and for better operation, and thus should not be considered as part of immovable assets, making the credit disallowable.

2. Classification of Equipment and Machinery:
The appellants relied on various Tribunal and Supreme Court decisions to argue that the equipment and machinery, fixed with nuts and bolts, should not be classified as immovable assets. The respondent, however, cited the Apex Court's decision in Quality Steel Tubes (P) Ltd. and Mittal Engineering Works (P) Ltd., which held that machinery embedded to earth and forming part of a plant are not excisable goods. The Tribunal noted the un-retracted statement of the Paint Shop Manager, who confirmed that the paint shop could not be removed without substantial loss to the fabricated material, supporting the classification of the machinery as immovable assets.

3. Applicability of Extended Period of Limitation:
The appellants contended that due to divergent views on the availability of credit, there was no suppression of facts or mala fide intent, and thus the extended period of limitation should not be invoked. The respondent countered that the law was well-settled by the Supreme Court in 1995, making the appellants' claim of doubt untenable. The Tribunal agreed with the respondent, stating that the Supreme Court's decision in Quality Steel Tubes (P) Ltd. clarified the issue, and any contrary views by lower courts could not justify the appellants' claim.

4. Divergent Views on Availability of Credit:
The appellants argued that different benches of the Tribunal had expressed divergent views on the availability of credit, which should preclude the invocation of the extended period of limitation. The Tribunal, however, emphasized that the Supreme Court's decision in Quality Steel Tubes (P) Ltd. was authoritative and binding, and any contrary views by lower courts were not valid grounds for claiming doubt or uncertainty.

5. Prima Facie Case for Stay of the Impugned Order:
The Tribunal found no prima facie case for staying the impugned order. The appellants had already deposited Rs. 7,24,726/-, and the Tribunal ordered them to deposit the remaining amount along with interest within eight weeks. The penalty was waived until the disposal of the appeal.

Conclusion:
The Tribunal upheld the disallowance of Cenvat credit on the grounds that the machinery constituted immovable assets, as supported by the Supreme Court's decisions in Quality Steel Tubes (P) Ltd. and Mittal Engineering Works (P) Ltd. The Tribunal dismissed the appellants' arguments regarding divergent views and the extended period of limitation, emphasizing the binding nature of the Supreme Court's rulings. The stay on the impugned order was denied, and the appellants were directed to deposit the remaining amount with interest.

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