2014 (2) TMI 752 - AT - Service Tax

CENVAT Credit - Availment of Credit in respect of structural items such as MS channels, beams etc. which were admittedly used for fabricating structural support to machinery in the cement factory - Held that - Appellant has not been able to establish that the above structural items were components/spares/accessories of any capital goods. On the other hand, the appellant admitted before the lower appellate authority that they had used the above structural items to fabricate structural support to machinery - no prima facie case for waiver of predeposit - Conditional stay granted.

Summary

Issues: Denial of CENVAT credit for structural items used in fabricating machinery support; Applicability of apex court ruling on definition of 'capital goods'; Prima facie case for waiver of predeposit.

1. Denial of CENVAT credit for structural items used in fabricating machinery support:
The appellant sought waiver and stay regarding the denial of CENVAT credit amounting to Rs.15,19,299 for structural items like MS channels and beams used in fabricating machinery support in a cement factory. The appellant failed to establish that these structural items were components/spares/accessories of any capital goods. The lower appellate authority confirmed that the items were used to fabricate structural support to machinery, not as components of capital goods. The Hon'ble Supreme Court's ruling on supporting structures not being considered as components/spares/accessories of capital goods under specific rules was deemed applicable to the case. The apex court's decision in Saraswati Sugar Mills case was cited, which favored the Revenue in this instance. Reference was made to a Madras High Court case and a previous apex court decision which was later distinguished in the Saraswati Sugar Mills case.

2. Applicability of apex court ruling on definition of 'capital goods':
The judgment discussed the application of the apex court's decision in the Saraswati Sugar Mills case to the definition of 'capital goods' under the CENVAT Credit Rules, 2004. The ruling highlighted the relevance of the apex court's decision in interpreting the definition of 'capital goods' and its impact on the denial of CENVAT credit for the structural items used in fabricating machinery support. The judgment emphasized the importance of precedent set by the apex court in similar cases to determine the eligibility of CENVAT credit in the present scenario.

3. Prima facie case for waiver of predeposit:
The Tribunal found no prima facie case for waiver of predeposit in the initial stages. The appellant had already deposited a partial amount and offered to deposit a further sum of Rs.2 lakhs despite difficulties. After considering the submissions, the Tribunal accepted the offer and directed the appellant to predeposit the additional amount within a specified timeline. Compliance with this directive would result in waiver and stay concerning the penalty imposed and the remaining amount of CENVAT credit along with interest. The Tribunal set specific dates for compliance reporting to ensure timely action and resolution of the matter.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT Bangalore covers the issues of denial of CENVAT credit, the applicability of apex court rulings on 'capital goods' definition, and the decision regarding waiver of predeposit, providing a comprehensive understanding of the legal aspects and reasoning behind the Tribunal's decision.