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2013 (10) TMI 332 - AT - Central ExciseCENVAT Credit Waiver of Pre-deposit - The appellant are manufacturers of sponge iron chargeable to Central Excise duty - Revenue was of the view that the items being neither inputs nor capital goods are not eligible for Cenvat credit Held that - The steel items are not covered by the definition of capital goods as given in Rule 2 (a) of Cenvat Credit Rules - These items would be eligible for Cenvat credit as input in terms of Rule 2 (k) only if the same have been used in fabrication of capital goods for use in the factory. Neither there is any communication to the Central Excise authorities regarding their use in fabrication of the capital goods -Bag Filter, Conveyer feeding material and Gantry EOT cranes nor the fabrication of the capital goods has been reflected in ER-1 returns - The extract of RG-1 register placed on record shows fabrication of gantry, the bag filter etc. in December 2011 and from this, it cannot be said that these items of capital goods had been fabricated by using the steel items received during July 2010 to December 2010 - prima facie case is against the assessee - Partial stay granted.
Issues involved:
Claim for Cenvat credit on steel items used in fabrication of capital goods. Analysis: The appellant, a manufacturer of sponge iron chargeable to Central Excise duty, claimed Cenvat credit on steel items like M.S. Angles, Channels, Plates, D.C. Sheets used for fabrication of capital goods during July 2010 to December 2010. The department contended that these items were neither inputs nor capital goods eligible for Cenvat credit. The Assistant Commissioner confirmed the Cenvat credit demand along with interest and penalty. On appeal, the Commissioner (Appeals) upheld the decision, noting the appellant's failure to prove the use of steel items in fabrication of capital goods. The appellant argued that the steel items were used for capital goods covered under Chapter 84, supported by internal records, RG-1 register entries, and a Chartered Engineer's certificate. However, the Commissioner (Appeals) found the evidence insufficient to support the claim, emphasizing Rule 9(5) of Cenvat Credit Rules placing the burden of proof on the assessee regarding the correct availing of Cenvat credit. During the hearing, the appellant's counsel argued for a waiver of pre-deposit, citing strong prima facie evidence in their favor. The department's representative opposed, emphasizing the lack of conclusive proof regarding the steel items' use in fabrication of capital goods. The Tribunal considered both sides' arguments and examined the records to determine the admissibility of Cenvat credit on the steel items. The Tribunal highlighted the importance of proving the use of items in fabricating capital goods for Cenvat credit eligibility. It noted Rule 9(5) requiring manufacturers to maintain proper records and shift the burden of proof to them for availed Cenvat credit. In this case, the Tribunal found the appellant failed to establish a prima facie case, as there was no communication to authorities or reflection in ER-1 returns regarding the steel items' use in fabricating capital goods. Consequently, the Tribunal directed the appellant to deposit Rs. 50,000 within four weeks. Upon compliance, the pre-deposit requirement for the remaining Cenvat credit demand, interest, and penalty would be waived, and the recovery stayed. The appellant was instructed to report compliance by a specified date.
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