2012 (11) TMI 201 - HC - Central Excise

Cenvat Credit on capital goods Assessee has taken and utilised the Cenvat credit in respect of the structural items such as MS Plates, Channels, MR Coils, HR coils Held that - The said goods, fall within the definition of the capital goods . The Tribunals have been consistently holding that the impugned items are entitled for Cenvat credit. In those circumstances, it is not correct to charge the assessee with suppression of facts, fraud, and collusion with intent to evade duty. Therefore, both on merit as well as on bar of limitation, the appeal filed by the Revenue came to be dismissed. No substantial question of law arises for consideration in this appeal. In favour of assessee

Summary

Issues:
1. Eligibility of Modvat Credit on specific capital goods.
2. Disallowance of Cenvat credit by assessing authority.
3. Appeal to Commissioner of Central Excise.
4. Tribunal's decision on eligibility of Cenvat credit.
5. Interpretation of Rule 57-Q regarding storage tanks.

Eligibility of Modvat Credit on Specific Capital Goods:
The Revenue appealed against the Tribunal's decision upholding the entitlement of the assessee to Modvat Credit on certain capital goods. The show-cause notice challenged the availment of Cenvat credit on various items, including pollution control equipment, components, spares, and accessories of specific goods. The assessing authority disallowed the credit, leading to recovery demands, interest, and penalties. However, the Commissioner of Central Excise overturned this decision, citing precedents where items used as parts of installed capital goods for repair and maintenance were considered eligible for credit. The Tribunal concurred, emphasizing that certain structural items fell within the definition of 'capital goods,' thus dismissing the Revenue's appeal.

Disallowance of Cenvat Credit by Assessing Authority:
The assessing authority initially disallowed the Cenvat credit on ineligible capital goods, prompting the assessee to contest this decision. The order-in-original demanded recovery of the credit, along with interest and penalties. However, the Commissioner of Central Excise, upon appeal, reversed this ruling based on established precedents indicating that items used for repair and maintenance of capital goods could qualify for credit. The Tribunal further supported this stance, highlighting the eligibility of specific structural items for Modvat credit, ultimately leading to the dismissal of the Revenue's appeal.

Appeal to Commissioner of Central Excise:
Following the assessing authority's disallowance of Cenvat credit on certain capital goods, the assessee appealed to the Commissioner of Central Excise. The Commissioner, after reviewing the case and relevant legal precedents, set aside the original order, declaring the assessee eligible for the credit as 'capital goods.' This decision was based on the consistent interpretation that items used for repair and maintenance of capital goods could be considered for credit, aligning with previous Tribunal rulings and High Court decisions.

Tribunal's Decision on Eligibility of Cenvat Credit:
Upon careful review and re-examination of the case, the Tribunal affirmed the eligibility of the assessee to avail and utilize Cenvat credit on specific structural items classified as 'capital goods.' The Tribunal emphasized that these items fell within the definition of capital goods and were consistently recognized as eligible for Modvat credit. Consequently, the Tribunal dismissed the Revenue's appeal, refuting any allegations of suppression of facts or intent to evade duty, both on merit and the bar of limitation.

Interpretation of Rule 57-Q Regarding Storage Tanks:
The Court referenced a previous judgment involving a similar issue related to the definition of capital goods under Rule 57-Q. The Court deliberated on the inclusion of storage tanks in the definition and the extension of benefits to inputs used in the construction of such tanks. The judgment highlighted the classification of storage tanks as components to main machinery and the rationale for extending benefits to related by-products stored in these tanks. The Court concluded that the assessing authority should have granted benefits to storage tanks storing by-products, aligning with the liberal interpretation of provisions. Ultimately, the Court found no justification to interfere with the orders passed by the appellate authority, favoring the assessee over the revenue in this context.