2017 (6) TMI 1208 - AT - Central Excise

CENVAT credit - inputs - structural components used for making capital goods - C.B.E.C. Circular No. 964/07/2012-CX dated 02.04.2012 - Held that - in view of the definition of inputs during the relevant period that inputs used for making capital goods within the factory were eligible for the purpose of Cenvat credit and in view of the said C.B.E.C. Circular No. 964/07/2012-CX dated 02.04.2012 - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Admissibility of Cenvat credit on capital goods
2. Interpretation of C.B.E.C. Circular regarding structural components
3. Validity of Order-in-Appeal and Order-in-Original

Admissibility of Cenvat credit on capital goods:
The appeal was filed against an Order-in-Appeal dated 29.09.2011, where the appellant, M/s Kumbhi Chini Mills, availed Cenvat credit on capital goods but later reversed the amount. The appellant sought permission for re-crediting the amount, which was denied. Subsequently, a Show Cause Notice was issued, contending that the goods were structural items not eligible for Cenvat credit. The Order-in-Original disallowed the credit and imposed a penalty, which was upheld in the impugned Order-in-Appeal. The appellant argued that as per Rule 2(k) of Cenvat Credit Rules, 2004, and a C.B.E.C. Circular, the goods were eligible for credit. The Tribunal, after considering the contentions, held that the Cenvat credit amounting to ?41,18,310/- was admissible to the appellant, setting aside both the Order-in-Original and Order-in-Appeal.

Interpretation of C.B.E.C. Circular regarding structural components:
The appellant relied on C.B.E.C. Circular No. 964/07/2012-CX dated 02.04.2012, which clarified that structural components essential for a boiler system could be classified as part of the boiler under the Tariff. The appellant argued that the goods in question were either structural components of a boiler system or inputs for making capital goods, making them eligible for Cenvat credit. This argument was considered valid by the Tribunal, leading to the decision in favor of the appellant.

Validity of Order-in-Appeal and Order-in-Original:
The Tribunal, after hearing both parties, found the contentions of the appellant's counsel to be legally sound. Considering the definition of inputs during the relevant period and the C.B.E.C. Circular provided, the Tribunal held that the Cenvat credit amount in question was indeed admissible to the appellant. Consequently, the Tribunal set aside both the Order-in-Original and the Order-in-Appeal, allowing the appeal and granting the appellant eligibility for consequential relief as per the law.