2012 (8) TMI 319 - AT - Central Excise

Input credit of excise duty on M.S, Angles and M.S. Channel, beams, plates etc. denial on the ground that such items are not used in the manufacture of M.S. Ingots - Show Cause Notice for disallowing the credit taken in the year 2004 was issued on 8th August, 2008 - demand is time-barred

Summary

Issues:
1. Availment of Cenvat credit on input goods for manufacturing M.S. Ingots.
2. Interpretation of whether certain items used in the fabrication of capital goods qualify for Cenvat credit.
3. Time-barred Show Cause Notice for disallowing credit taken in 2004.

Issue 1: Availment of Cenvat credit on input goods for manufacturing M.S. Ingots:
The case revolved around the Respondents, who were manufacturers of excisable goods, specifically M.S. Ingots, and had availed input credit of excise duty on items like M.S. Angles and M.S. Channel, beams, plates, etc. The Revenue contended that the credit on such items should not have been taken as they were not used in the manufacture of M.S. Ingots. The Respondents argued that these items were utilized in the fabrication of capital goods like EOT cranes, which were further used in the manufacturing process. The Tribunal considered various decisions supporting the Respondents' stance, emphasizing that the dispute pertained to the period of 2004-2005.

Issue 2: Interpretation of whether certain items used in the fabrication of capital goods qualify for Cenvat credit:
The Revenue cited the decision of the Larger Bench of the Tribunal in the case of Vandana Global and the apex Court's ruling in Saraswati Sugar Mills, asserting that Cenvat credit could not be claimed for inputs used in constructing immovable items like EOT cranes. However, the Tribunal noted that despite these precedents, there remained ambiguity regarding inputs used in manufacturing machinery such as cranes essential to the manufacturing process. The question of denying credit based on machinery being affixed to the ground was yet to be conclusively settled.

Issue 3: Time-barred Show Cause Notice for disallowing credit taken in 2004:
The Respondents raised the issue of the Show Cause Notice being time-barred since it was issued in 2008 for disallowing credit taken in 2004. The Tribunal considered the timeline of events and the legal landscape at the time of credit availing. Given the existence of favorable decisions for the Respondents until the Vandana Global case, the Tribunal concluded that the demand was indeed time-barred. Consequently, the appeal filed by the Revenue was rejected, and the cross-objections by the Respondent were disposed of in line with the impugned order, without any additional relief sought.

This comprehensive analysis of the judgment highlights the key legal issues addressed by the Appellate Tribunal CESTAT, New Delhi, providing a detailed insight into the arguments presented by both parties and the Tribunal's reasoning leading to the final decision.