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2012 (6) TMI 696 - AT - Central ExciseDenial of CENVAT credit - steel items used in the manufacture of immovable property - application for waiver of pre-deposit - Held that - As per Rule 2(k) of the CENVAT Credit Rules, 2004, to qualify for capital goods the item have to be goods first. Goods by definition are items which can come to the market for being bought and sold and they have to be movable in nature. Chimneys of power plants and storage silos are immovable properties and are not goods. Therefore, though storage tanks have been specified under capital goods, only such storage tanks which are goods can fall within the definition of capital goods. If the storage tanks are immovable property, they cannot come under the definition of capital goods - capital assets and capital goods cannot be held to be synonymous, thus, foundations and supporting structures imbedded to earth may be categorized as capital assets but would not qualify to be capital goods in terms of the definition contained in the Cenvat Credit Rules - the appellant has not made out any prima facie case for complete waiver of pre-deposit.
Issues:
- Eligibility of CENVAT credit on steel items used in the construction of immovable property - storage tanks/silo and chimney. - Interpretation of Rule 2(k) of the CENVAT Credit Rules, 2004 regarding capital goods. - Applicability of previous judgments on similar cases to the current scenario. Eligibility of CENVAT Credit on Steel Items: The case involved a dispute regarding the denial of CENVAT credit amounting to Rs.61,44,464/- on steel items used in the construction of storage tanks/silo and chimney, which were considered immovable properties. The appellant contended that these items should be eligible for credit as they were used in the manufacture of capital goods. The appellant relied on various judgments to support their argument, emphasizing the importance of power generation in the manufacturing process. However, the Revenue argued that since the steel items were used in the construction of civil structures classified as immovable properties, they did not qualify for CENVAT credit under the CENVAT Credit Rules. Interpretation of Rule 2(k) of CENVAT Credit Rules: The Tribunal analyzed Rule 2(k) of the CENVAT Credit Rules, 2004, which defines capital goods. The rule specifies certain goods as capital goods, including storage tanks. However, the Tribunal noted that for an item to be considered a capital good, it must first be classified as a movable good that can be bought and sold in the market. Since storage tanks, chimneys, and silos were deemed immovable properties, they did not meet the criteria to be classified as capital goods eligible for CENVAT credit. The Tribunal referred to previous judgments and highlighted the distinction between capital assets and capital goods, emphasizing that immovable structures embedded in the earth do not qualify as capital goods under the CENVAT Credit Rules. Applicability of Previous Judgments: The Tribunal considered several previous judgments to determine the eligibility of CENVAT credit on steel items used in the construction of immovable properties. The Tribunal referenced a Larger Bench decision that concluded steel structures used in the manufacture of immovable capital assets were not eligible for CENVAT credit. Additionally, the Tribunal cited a High Court judgment regarding excise duty liability on structures embedded in civil work, emphasizing that such structures were considered immovable properties. The Tribunal also discussed a Supreme Court case where iron and steel items used in support structures were deemed ineligible for MODVAT credit. The Tribunal distinguished a previous judgment where the chimney was part of an equipment, unlike the current scenario where the chimney was part of a power plant. Based on these analyses, the Tribunal ruled that the appellant did not establish a prima facie case for a complete waiver of the dues adjudged, directing them to make a pre-deposit within a specified period. This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the arguments presented by both parties, the legal interpretations made by the Tribunal, and the application of previous judgments to the current case.
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