2014 (3) TMI 629 - AT - Central Excise

Availment of CENVAT Credit - Whether the appellant is eligible for cenvat credit of the central excise duty paid on M.S. Beams and M. S. Channels etc. which were used for the construction of the various structures - Held that - appellant had reversed the cenvat credit availed of the duty paid on the items after receipt of order in original dated 06.07.06. It can be held that having not contested the issue of availment of cenvat credit on the very same item which was denied by order in original dated 06.07.06, the appellants, cannot, in this appeal claim to have a bonafide belief as to eligibility of cenvat credit on these items. The bonafide belief comes from the fact that the appellant could have had entertained a view that they are eligible for the cenvat credit, which in the current case seems to be absent due to and earlier order passed by the adjudicating authority holding that the appellant is ineligible for availment of cenvat credit on identical goods, for earlier period - appellant has not made out a case either on merits or on limitation - Decided against assessee.

Summary

Issues:
1. Eligibility for cenvat credit on M.S. Beams and M. S. Channels used in construction work.
2. Question of limitation regarding the availed cenvat credit.

Analysis:

Issue 1: Eligibility for cenvat credit on construction materials
The appellant availed cenvat credit on M.S. Beams and M. S. Channels used in construction work, considering them as 'Capital Goods'. However, it was contended that these items did not qualify as 'capital goods' under Rule 2(a)(A)(iii) of the Cenvat Credit Rules, 2004. The Tribunal analyzed the usage of these items and found that they were not used for the fabrication of machinery or tanks, as required for consideration as capital goods. The judgment of a larger bench in the case of Vandana Global was cited to support this finding. Therefore, the Tribunal concluded that the appellant was not eligible for cenvat credit on these construction materials.

Issue 2: Question of limitation
The appellant argued that the entire order was hit by limitation as they had filed regular returns during the relevant period, citing precedents where the extension period of limitation was not invoked when declarations and monthly returns were filed. However, the Additional Commissioner pointed out that a previous show cause notice had been issued to the appellant on the same issue, resulting in a confirmed demand. Despite this, the appellant continued to avail further cenvat credit on the same products for a subsequent period. The Tribunal held that the appellant's failure to contest the issue earlier undermined any claim of a bonafide belief in the eligibility for cenvat credit on these items. The absence of a bonafide belief, as evidenced by the earlier order denying credit on identical goods, led the Tribunal to reject the appellant's claim on the question of limitation.

In conclusion, the Tribunal upheld the impugned order, rejecting the appeal on the grounds of both merits and limitation.