2014 (4) TMI 456 - AT - Central Excise

Denial of CENVAT credit - credit has been denied on the ground that these inputs were used in making structurals for supporting capital goods used in the plant and machinery and on such goods cenvat credit cannot be allowed - Held that - Conditional stay granted.

Summary

Issues:
Denial of CENVAT credit for structural steel items used in making capital goods and supporting structures.

Analysis:
The appeal concerns the denial of CENVAT credit taken between May'08 to April'09 for structural steel items like steel rib, HR coil, MS angles, MS beam, MS channel, MS plate. The denial was based on the argument that these inputs were used in making structurals for supporting capital goods in the plant and machinery, thus disallowing CENVAT credit amounting to approximately Rs.1.45 lakhs.

The appellant's counsel presented a detailed chart demonstrating the usage of each disputed item. While acknowledging that some goods were used for fabricating capital goods within the factory, the counsel did not dispute that a portion of the goods was utilized as supporting structures. An estimated credit of Rs.46,000/- was attributed to items used in fabricating capital goods, with around Rs.99,000/- allocated to structurals.

The appellant referred to a Larger Bench decision of the Tribunal in the case of Vandana Global Ltd. Vs CCE Raipur-2010, currently under challenge before the Chhattisgarh High Court, highlighting the absence of a final view on the issue. Consequently, the appellant requested a waiver of predeposit for appeal admission.

In opposition, the Authorized Representative for Revenue argued that the decision of the Larger Bench in the Vandana Global Ltd. case should be the basis for consideration, emphasizing the Supreme Court's ruling in Saraswati Sugar Mills Vs CCE Delhi - 2011, which disallowed CENVAT credit on structurals.

After considering both sides' submissions, the judge directed the appellant to make a predeposit of Rs.1,00,000/- for appeal admission, with a deadline of 4 weeks for compliance and a reporting date of 15.2.2013. Pending the appeal, the balance of dues would be waived and recovery stayed, subject to the predeposit.

This judgment underscores the importance of distinguishing between inputs used for capital goods fabrication and those utilized for supporting structures, with the decision hinging on the interpretation of relevant legal precedents and ongoing judicial challenges.