2013 (8) TMI 301 - AT - Central Excise

Cenvat Credit setting of paint shop - items were used in the factory for fabrication and erection of paint shop, which being fixed to the earth structure, is not excisable Held that - Objection by the department is absurd, as for permitting capital goods Cenvat credit, what has to be seen is as to whether the goods fall in the Chapters specified in the definition of capital goods or are the items specifically mentioned in the definition of capital goods and secondly whether those goods were used in the factory. The purpose for which the goods were used and whether after use the goods became part of plant and machinery fixed to/embedded to the earth is not relevant - Cenvat credit cannot be denied Decided in favor of Assessee.

Summary

Issues: Dispute over eligibility for capital goods Cenvat credit under Central Excise Tariff for goods used in fabrication and erection of paint shop.

Analysis:
1. The appellants, manufacturers of goods under Chapter 87, claimed Cenvat credit for goods supplied by M/s Kamal Envirotech Pvt. Ltd. for setting up a paint shop. The Revenue contended that the goods were used for erecting an immovable paint shop, making them ineligible for capital goods Cenvat credit.
2. The Additional Commissioner confirmed the Cenvat credit demand, imposing penalties on the appellant and its executives. Appeals to the Commissioner (Appeals) were dismissed, leading to the current appeal.
3. The appellant's counsel argued that the goods received fell under Chapter 85, meeting the definition of capital goods and were used in the factory, satisfying the conditions for Cenvat credit. They distinguished the Apex Court judgment cited by the Revenue, stating it was not applicable to the current case.
4. The Departmental Representative supported the impugned order, emphasizing that the goods were used to fabricate and erect the paint shop, which was considered immovable property and not excisable, justifying the denial of Cenvat credit.
5. The Tribunal noted that the dispute centered on the availability of capital goods Cenvat credit for items supplied by M/s Kamal Envirotech Pvt. Ltd. for the paint shop. The department's objection was based on the use of these items in fabricating the paint shop, which was considered immovable property.
6. The Tribunal found the department's objection to be unfounded, stating that the key considerations for capital goods Cenvat credit were whether the goods fell under the specified chapters and were used in the factory. The purpose of use or subsequent fixation to the earth was deemed irrelevant. As the items received met the criteria and were used in the factory, the denial of Cenvat credit was unjustified. The impugned order was set aside, and the appeals were allowed.