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2014 (8) TMI 913 - AT - Central ExciseDenial of CENVAT Credit - Cenvat Credit availed by the respondent on MS Bar, CTD bars, beams etc. which was used by the respondent for setting up the klin cooler and chimney in their factory - Revenue is of the view that these items does not cover under Rule 2(k) of the CENVAT Credit Rules, 2004, therefore, the respondents are not entitled for input credit, therefore the show-cause notice was issued, the matter was adjudicated, and demand was confirmed by the Adjudicating Authority along with interest and equivalent amount of penalty - Held that - There is no doubt that the larger bench of the Tribunal has held that the explanation amended in 2009 of Rule 2(k) of CENVAT Credit Rules, 2004, is clarificatory. Despite that, the Hon ble Apex Court in Rajasthan Spinning & Weaving Mills Ltd. (2010 (7) TMI 12 - SUPREME COURT OF INDIA) held that Cenvat credit on the above said items is available if same has been used for setting up capital goods. The decision of the Hon ble Apex court will prevail over the decision of the Larger Bench of the Tribunal. Therefore, following the decision of the Rajasthan Spinning & Weaving Mills Ltd. (supra), I hold that the respondent are entitled for Cenvat Credit on the items in dispute during the impugned period, which has been used for setting up capital goods i.e. kiln, cooler and chimney. - Decided against Revenue.
Issues:
Appeal against Commissioner (Appeals) order allowing Cenvat Credit on specific items used for setting up capital goods. Analysis: The appellant appealed against the impugned order where the Commissioner (Appeals) allowed Cenvat Credit availed by the respondent on MS Bar, CTD bars, beams, etc., used for setting up the klin cooler and chimney in their factory. The revenue contended that these items do not fall under Rule 2(k) of the CENVAT Credit Rules, 2004, thus the respondents are not entitled to input credit. The matter was adjudicated, and demand was confirmed by the Adjudicating Authority. However, the Commissioner (Appeals) relied on a decision by the Hon'ble High Court of Bombay in the respondent's own case and set aside the order of adjudication. The revenue was aggrieved by this decision and appealed to the Tribunal. The revenue argued that as the items like MS bars, CTD bars, beams were used for setting up the kiln, cooler, and chimney, which are attached to the earth, the respondent is not entitled to take Cenvat Credit on these items. They cited a decision by the Larger Bench of the Tribunal in Vandana Global Ltd. to support their position. On the other hand, the respondent's counsel contended that during the relevant period, the definition under Rule 2(k) of CENVAT Credit Rules, 2004, included the items in question for availing Cenvat Credit. They referred to a decision by the Hon'ble Apex Court in the case of Rajasthan Spinning & Weaving Mills Ltd., which held that the assessee is entitled to take Cenvat credit on items used for setting up capital goods. They also mentioned a decision by the Tribunal in the case of Jindal Steel & Power Ltd., which supported the respondent's position. After hearing both sides and considering the submissions, the Tribunal noted that the explanation amended in 2009 of Rule 2(k) of CENVAT Credit Rules, 2004, was clarificatory. Despite this, the Hon'ble Apex Court in Rajasthan Spinning & Weaving Mills Ltd. held that Cenvat credit on the items in question is available if they have been used for setting up capital goods. The Tribunal held that the decision of the Hon'ble Apex Court prevails over the decision of the Larger Bench of the Tribunal. Therefore, following the decision of the Hon'ble Apex Court, the Tribunal concluded that the respondent is entitled to Cenvat Credit on the items used for setting up capital goods during the relevant period. Consequently, the Tribunal found no infirmity in the impugned order and upheld it, dismissing the appeal of the revenue.
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