2014 (4) TMI 140 - AT - Central Excise

Availment of CENVAT Credit - Held that - user of the steel items, in question, in fabrication of evaporation plant to reduce the quantity of affluent is not disputed and thus use of the steel items, in question, for fabrication of pollution control equipment stands accepted by the department. I find that in identical circumstances Hon ble Karnataka High Court in the case of CCE, Bangalore II vs. SLR Steels Ltd. (2012 (9) TMI 169 - KARNATAKA HIGH COURT ) and the Apex Court judgment in the case of CCE, Jaipur vs. Rajasthan Spinning & Weaving Mills Ltd. (2010 (7) TMI 12 - SUPREME COURT OF INDIA) has held that the steel items used in fabrication of pollution control equipment would be eligible for Cenvat credit and the Cenvat credit cannot be denied just on the ground that the pollution control equipment is embedded in the earth. In any case, any item of machinery or equipment which has either been fabricated in the factory or has been brought to the factory, would after installation, become fixed to the earth and, therefore, in my view on this ground, the Cenvat credit cannot be denied - Decided in favour of assessee.

Issues:
1. Eligibility of Cenvat credit for steel items used in fabrication of a new multi-effect evaporating plant.
2. Interpretation of capital goods under Rule 2(a) of the Cenvat Credit Rules.
3. Applicability of judgments in similar cases.
4. Consideration of pollution control equipment as goods for Cenvat credit eligibility.

Analysis:

1. The case involved a dispute regarding the eligibility of Cenvat credit amounting to Rs. 4,78,705/- for steel items used in the fabrication of a new multi-effect evaporating plant. The department contended that the steel items were not eligible for credit as they were used for repair and maintenance of existing plant and machinery, not for the fabrication of new capital goods.

2. The Assistant Commissioner upheld the denial of Cenvat credit, stating that the evaporation plant, although part of the pollution control system, could not be considered as goods for excise duty purposes. The Commissioner (Appeals) also affirmed this decision, emphasizing that the evaporation plant, being immovable and embedded in the earth, did not qualify as goods for Cenvat credit.

3. The appellant argued that the steel items were used in the fabrication of pollution control equipment, which falls under the definition of capital goods as per Rule 2(a). Referring to precedents such as the Supreme Court and Karnataka High Court judgments, the appellant contended that steel items used in pollution control equipment fabrication should be eligible for Cenvat credit, regardless of being embedded in the earth.

4. The Tribunal, after considering both parties' arguments and reviewing the records, found that the use of steel items for the fabrication of pollution control equipment was undisputed. Citing the judgments from the Apex Court and the Karnataka High Court, the Tribunal held that the mere fact of equipment being fixed to the earth post-installation does not disqualify it from being considered as goods for Cenvat credit eligibility. The Tribunal emphasized that the focus should be on whether the machinery or equipment, when brought into the factory or fabricated, is movable and qualifies as goods under the capital goods definition in Rule 2(a).

5. Consequently, the Tribunal set aside the impugned order, allowing the appeal and ruling in favor of the appellant's eligibility for Cenvat credit for the steel items used in the fabrication of the pollution control equipment.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by both parties, relevant legal interpretations, and the final decision rendered by the Tribunal.

← Previous Next →