2015 (4) TMI 651 - AT - Central Excise

Denial of CENVAT Credit - credit taken on capital goods and inputs contained in semi-finished goods/ work in progress, destroyed in a fire accident - Held that - It is observed from the facts of the case available on record that certain capital goods, which were used for considerable period and inputs contained in the semi-finished goods/ work in progress were destroyed in a fire accident that happened on 03.02.2012 - In view of the settle legal proposition, demand of CENVAT credit taken with respect to capital goods in use and inputs contained in semi-finished goods/ work in progress are required to be set-aside. Following the ratio 2010 (7) TMI 433 - GUJARAT HIGH COURT , no demand of credit taken services used in installation of capital goods destroyed in fire, can sustain. - Decided in favour of assessee.

Summary

Issues:
- Denial of CENVAT credit on capital goods and inputs destroyed in fire
- Demand of services availed for installation of capital goods destroyed in fire
- Dispute over destruction of inputs and semi-finished goods
- Legal precedent on availing CENVAT credit for destroyed goods

Analysis:
The appeal was filed concerning the confirmation of demands on CENVAT credit for capital goods and inputs destroyed in a fire accident, along with services utilized in the installation of the destroyed capital goods. The appellant argued that denial of credit based on previous case laws was unjustified. The authorized representative for the Revenue defended the order, highlighting a demand for destruction of inputs recoverable from the appellant. However, discrepancies were pointed out regarding the destruction of only semi-finished goods/work in progress rather than inputs. After hearing both sides and examining the case records, it was noted that the destroyed capital goods and inputs were used for a considerable period. Citing the legal precedent from the Hon'ble Gujarat High Court, it was established that the appellant was entitled to avail CENVAT credit for the destroyed goods as they had been used in manufacturing final products. The Tribunal found no justification for reversing the credit availed on inputs destroyed in the fire. Consequently, the demand for CENVAT credit on capital goods, inputs, and services used in installation of the destroyed goods was set-aside based on the settled legal proposition.

The judgment allowed the appeal filed by the appellant, providing consequential relief as per the observations made. The decision was pronounced in the open court, granting relief to the appellant in line with the legal precedents and factual findings regarding the destruction of goods in the fire accident.