2014 (1) TMI 728 - AT - Central Excise

Availment of Cenvat credit - MS plates, sheets, beams, angles, joists, coils, channels, aluminium plates/sheets used in structural construction of factory buildings Waiver of Pre-deposit Held that - The Commissioner observed that the machinery is capable of functioning without a supporting structure or the operating platform - Both the sides have not come out with the correct details of use of the materials as to whether in the construction and how much quantity was used in the structural purpose of the machinery - there is factual dispute on the use of the capital goods - the applicant failed to make out a prima facie case for waiver of amount the applicant directed to deposit Rupees fifty lakhs as pre-deposit upon such submission rest of the duty to be stayed till the disposal partial stay granted.

Summary

Issues: Alleged wrongful availing of CENVAT credit on capital goods used in construction of factory buildings and tanks.

Analysis:
The case involves an applicant engaged in the manufacture of poly vinyl chloride resin, accused of availing credit on capital goods used in the construction of various structures. The Commissioner confirmed the demand of CENVAT credit along with interest and penalties. The applicant contended that they did not avail credit on civil structures, concrete platforms, or elevated structures, but only on structures supporting tanks and vessels integral to the plant's operation. However, the Commissioner observed that the machinery could function without the supporting structure or operating platform. Both sides failed to provide clear details on the use of materials for construction purposes, leading to a factual dispute. Consequently, the applicant was directed to deposit a specified amount within a set timeframe, with waiver and stay subject to compliance.

This judgment highlights the importance of establishing a clear link between the availed credit and its legitimate usage in manufacturing processes. Failure to provide sufficient evidence or details regarding the use of capital goods for eligible purposes can result in disputes and the necessity for predeposit of disputed amounts. The decision emphasizes the need for transparency and accuracy in documenting and justifying CENVAT credit claims to avoid potential penalties and compliance issues.