2015 (6) TMI 734 - AT - Central Excise

Denial of CENVAT credit - credit on ASTM, shapes and sections, joists, MSI beam, MS angle, channel, welding rods and black sheet as capital goods - items do not fall under the definition of Capital goods as per Rule 2A of the Cenvat Credit Rules, 2004 - Held that - Cenvat credit on the items in question was availed by the appellant during the period 2006-2007 up to 15.2.09 and in their show cause notice, it has been recorded that appellant vide their letter dated 3.3.2010 contended that the Cenvat credit on the subject goods is admissible to them as input of capital goods under the category of input of capital goods have been used for supporting erection of plant and machinery. Further, I find that show cause notice has been issued on the basis of decision of Tribunal s decision in the case of Vandana Global (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)) to say that Cenvat credit on these items is not available. As during the impugned period availment of Cenvat credit on the items in question was in dispute as there were contrary decision of this Tribunal. Therefore, this Tribunal held in such a situation, extended period of limitation is not invokable in the case of Jindal Steel & Power (2010 (10) TMI 329 - CESTAT, NEW DELHI) and Lloyds Metal (2014 (8) TMI 913 - CESTAT MUMBAI) and Premier Iron and Metal Industries (2011 (6) TMI 685 - CESTAT MUMBAI). Extended period of limitation is not invokable . Further, I find that in this case, the appellant is located in Jammu and availing the exemption under notification No. 56/2002 wherein whatever duty paid by the appellant from PLA , he is entitled to refund of the same. If in this case appellant has not taken the Cenvat credit therefore, whatever duty they would have paid and they could claim the same as refund. Therefore, I hold that it is a case of revenue neutral situation and in that case also the allegation of suppression cannot be alleged against the appellants. - Decided in favour of assessee.

Summary

Issues:
1. Denial of Cenvat credit on various items as capital goods.
2. Claiming area-based exemption under notification No. 56/2002.
3. Dispute over the usage of items for fabrication of capital goods.
4. Applicability of extended period of limitation.
5. Allegation of suppression in availing Cenvat credit.

Analysis:

1. The appellant appealed against the denial of Cenvat credit on certain items, arguing that these items were essential for the functioning of machinery and therefore qualified as capital goods. The appellant contended that the items were used for structures and to support machinery, making them integral to the manufacturing process. The appellant cited relevant case laws to support their argument and claimed that contrary decisions by the Tribunal and High Court created ambiguity regarding the eligibility of Cenvat credit on these items. The appellant emphasized that the extended period of limitation should not apply as the issue was not disputed until a certain date, and suppression could not be alleged in this case.

2. The appellant, being located in Jammu, was availing the benefit of an area-based exemption under notification No. 56/2002. It was argued that if the Cenvat credit was not availed, the appellant would be entitled to a refund of any excess duty paid, resulting in a revenue-neutral situation. This aspect further supported the appellant's claim that there was no suppression involved in the availing of Cenvat credit on the disputed items.

3. The respondent opposed the appellant's contentions, stating that the appellant failed to adequately explain the usage of the items in question before the lower authorities. The respondent argued that without detailed information on the utilization of these items for the fabrication of capital goods, the appellant's case lacked merit. Referring to relevant precedents, the respondent claimed that suppression could be alleged due to the lack of disclosure regarding the availing of Cenvat credit on these items.

4. The Tribunal examined the issue on merits and found that the appellant had sufficiently demonstrated the usage of the disputed items in the manufacturing process through provided photographs and explanations. The appellant passed the usage test, making them eligible to avail Cenvat credit on the items in question. Additionally, the Tribunal determined that the extended period of limitation was not applicable in this case, considering the ambiguity created by conflicting decisions and the appellant's location-based exemption eligibility.

5. In conclusion, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief if applicable. The decision was based on the appellant's success on merits, the non-applicability of the extended period of limitation, and the revenue-neutral nature of the situation, where suppression could not be alleged against the appellant.

This detailed analysis of the judgment highlights the key legal arguments, precedents cited, and the Tribunal's reasoning for the decision on each issue involved in the case.