2015 (5) TMI 285 - AT - Central Excise

CENVAT Credit - Credit on materials and capital goods used by for the erection and commissioning of the paint shop - capital goods embedded to earth - nexus with manufacture activity - Held that - there is no dispute about the fact that the items falling under Chapter 85 which are covered by the definition of capital goods were received in the factory and there is also no dispute that those items were used in the factory, the Cenvat credit cannot be denied. The ground on which the department seeks to deny the Cenvat credit is not relevant to the issue. - following the decision in the case of of M/s Omax Auto Limited Versus CCE, Delhi-III 2013 (8) TMI 301 - CESTAT NEW DELHI , credit allowed. Mould and dies are sent to the job workers for manufacturing intermediate product, the appellant is entitled to take Cenvat credit. In these circumstances, the Cenvat credit on the item Nos. 1, 2 and 5 are allowed and item No. 3 & 4 are denied. Consequently demand of ₹ 11,56,087/- alongwith interest is confirmed. As the demand confirmed has already reversed by the appellant, therefore, the appellant are required to pay interest thereon within a period of 30 days from the issuance of this order. - No penalty is imposable on the appellant in the facts and circumstances of the case. - Decided in favour of assessee.

Summary

Issues:
- Denial of Cenvat credit on various items including materials, capital goods, air conditioners, inputs sent to job workers, and moulds and dies.

Analysis:
1. The appellant contested the denial of Cenvat credit on items used for the erection and commissioning of paint shops for scooters and motorcycles, air conditioners in the office premises, inputs sent to job workers, and moulds and dies. The appellant relied on a previous Tribunal judgment and a Commissioner's order in their favor. The appellant argued that as per Rule 4(5)(b) of the Cenvat Credit Rules, 2004, they were entitled to the Cenvat credit. The appellant also cited a High Court decision to support their claim that interest was not payable due to the reversal of Cenvat credit on certain items.

2. The Tribunal examined the case law cited by the appellant and found merit in their arguments regarding the availability of Cenvat credit on items used for the erection of paint shops. Citing a previous judgment, the Tribunal held that the nature of usage, such as being fixed to earth, does not affect the eligibility for Cenvat credit as long as the items fall under the specified chapters and were used in the factory. Consequently, the Tribunal allowed the Cenvat credit on the items related to the paint shops.

3. The appellant voluntarily gave up their claim for Cenvat credit on air conditioners and inputs sent to job workers, having already reversed the credit and maintained a sufficient balance in their account. The Tribunal confirmed the denial of Cenvat credit on these items and imposed interest accordingly. However, for the moulds and dies sent to job workers for manufacturing intermediate products, the Tribunal ruled in favor of the appellant, allowing the Cenvat credit as per Rule 4(5)(b) of the Cenvat Credit Rules, 2004.

4. Ultimately, the Tribunal disposed of the appeal by allowing the Cenvat credit on items related to the paint shops and the moulds and dies, while denying the credit on air conditioners and inputs sent to job workers. The Tribunal confirmed a specific demand amount along with interest, which the appellant was required to pay within a specified period. No penalty was imposed on the appellant in this case.

This detailed analysis of the legal judgment addresses the issues involved and the Tribunal's decision on each aspect of the denial of Cenvat credit on various items, providing a comprehensive overview of the case.