2014 (8) TMI 437 - AT - Central Excise

CENVAT Credit - Credit on parts of capital goods - parts of the capital goods on which credit is availed are not specified in the definition of capital - Held that - for eligibility of cenvat credit on components, spares and accessories of the capital goods need not fall under any of the Chapter specified in Clause (i) of the capital goods definition given under Rule 2(a) (A) of Cenvat Credit Rules. A view can be possible that components, spares and accessories would fall under chapters of Central Excise Tariff Act but are used for capital goods specified under Clause (i) of capital goods definition. Prima facie, this is an arguable case and therefore, OIA dated 09.12.2013 passed by the first appellate authority is set-aside and matter is remanded back to him for deciding the issue in de-novo proceedings, without insisting on any pre-deposit from the appellant. - Decided in favour of assessee.

Summary

Issues: Stay application against OIA for non-compliance of pre-deposit, admissibility of cenvat credit on parts of capital goods.

The appellant filed a stay application against OIA for non-compliance of pre-deposit of Rs. 8 Lakhs. The advocate argued that the issue concerned the admissibility of cenvat credit on certain parts of capital goods. The adjudicating authority denied cenvat credit, stating that the parts on which credit was availed did not fall under the definition of capital goods as per Rule 2(a) (A) of Cenvat Credit Rules, 2004. The advocate emphasized that the components, spares, and accessories need not necessarily fall under specific chapters of the Central Excise Tariff Act for eligibility of cenvat credit. He requested a remand to the first appellate authority for a decision on merits without further deposit.

The Revenue defended the first appellate authority's order. After hearing both sides and reviewing the case records, the Tribunal found the issue to be narrow. The Tribunal allowed the stay application and proceeded with the final disposal of the appeal. It was noted that the eligibility of cenvat credit on components, spares, and accessories need not be restricted to specific chapters of the Central Excise Tariff Act if they are used for capital goods specified under the definition. The Tribunal considered the appellant's case to be arguable on merits and set aside the OIA, remanding the matter back to the first appellate authority for a fresh decision without requiring any pre-deposit. The Tribunal clarified that it had not expressed any opinion on the case's merits and left all issues open for the first appellate authority to consider. The appellant was granted an opportunity to present their case during the remand proceedings.

Ultimately, the appeal filed by the appellant was allowed by way of remand to the first appellate authority, as pronounced in the Court.