2016 (6) TMI 1146 - AT - Central Excise

CENVAT credit - inputs used in the fabrication of various capital goods like kilns, electrification and power plants, conveyor system etc - Held that - we find that the fact of use of the item does not stand examined by the adjudicating authority inasmuch as the issue stand decided on the principle that such items cannot be held to be cenvatable. As such we deem it fit to remand the matter for fresh decision to the Commissioner in the light of the law declared in the above referred decision as also any other which the appellant may rely, after examining the factual position of use of inputs. Appeal is allowed by way of remand. The issue of limitation as also imposition of penalty is kept open for the Commissioner to re-decide the same in the remand proceedings - appeal allowed by way of remand.

Summary

Issues: Disputed cenvat credit on inputs used for fabrication of capital goods, rejection of appeal by Commissioner (Appeals) based on deletion of "plant" from capital goods definition, applicability of Tribunal and High Court decisions on modvatable items, need for examination of factual use of inputs, remand for fresh decision, open issues of limitation and penalty.

In this judgment by the Appellate Tribunal CESTAT NEW DELHI, the issue revolved around the disputed cenvat credit availed by the appellant on various inputs utilized in the fabrication of capital goods such as kilns, electrification, power plants, and conveyor systems. The Commissioner (Appeals) had rejected the appeal, citing the deletion of "plant" from the definition of capital goods during the relevant period. The appellant's counsel relied on the Tribunal's decision in Monnet Ispat & Energy Limited vs. CCE, Raipur and the Madras High Court decision in India Cements Limited vs. CESTAT, Chennai, where the use of iron and steel items for the fabrication of specific equipment was deemed modvatable. However, the Tribunal noted that the adjudicating authority had not examined the actual use of the items, basing the decision on the premise that such items were not cenvatable. Consequently, the Tribunal deemed it appropriate to remand the matter for a fresh decision by the Commissioner, considering the legal precedents cited and any additional evidence provided by the appellant regarding the factual utilization of the inputs. The appeal was allowed for remand, with the issues of limitation and penalty left open for the Commissioner to reconsider during the remand proceedings. The judgment emphasized the importance of a thorough examination of the factual circumstances surrounding the use of inputs in determining the eligibility for cenvat credit, highlighting the need for a comprehensive review based on established legal principles.