2015 (9) TMI 721 - AT - Central Excise

Denial of CENVAT Credit - Capital goods - Whether the CENVAT Credit of items like Cement, Angles, Channels etc used for civil foundation work and support structure of the machinery will be admissible or not - Held that - Issue of admissibility of CENVAT Credit on these items was decided by CESTAT Larger Bench in the case of Vandana Global Ltd Vs CCE Raipur (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)). Once conflicting views were given by the Court on the issue and the issue got resolved by the Larger Bench, then it cannot be said that there was any intention to evade payment of taxes or in taking wrong credit. Accordingly, demand for the period prior to amendment of Rule 2(k) of CENVAT Credit Rules, 2004 has to be considered as time barred. On merit also, the jurisdictional High Court in the case of Mundra Port & Special Economic Zone Ltd Vs CCE & C (2015 (5) TMI 663 - GUJARAT HIGH COURT) held that such credit is admissible before amendment of Rule 2(k) w.e.f. 07.07.2009. Appeal filed by the Appellant with respect to CENVAT Credit of demand for the period prior to the amendment of Rule 2(k) of CENVAT Credit Rules, 2004 is allowed - Appellant had reversed the CENVAT Credit along with interest - Decided in favour of assessee.

Summary

Issues involved:
Admissibility of CENVAT Credit on items like Cement, Angles, Channels used in foundation work and support structures for machinery.
1. Admissibility of CENVAT Credit before the amendment:
The appeal was filed regarding the issue of taking CENVAT Credit on items like Cement, Angles, Channels used in foundation work and support structures for machinery. The Appellant argued that before the amendment of CENVAT Credit Rules in 2009, the definition of Inputs did not restrict credit on these items. The Appellant cited a case where conflicting views existed on the admissibility of such credit, and argued that the extended period of 5 years cannot be invoked for demanding credit reversal prior to the amendment in 2009. The Appellant also referenced a High Court case supporting the admissibility of such credit on similar items.
2. Arguments on admissibility post-amendment:
The Revenue argued that credit taken after the 2009 amendment to CENVAT Credit Rules would not be admissible as the provisions were clear. In response, the Appellant stated that all CENVAT Credit for the period after the amendment had been reversed, and thus, no penalty should be imposed.
3. Judgment on admissibility:
After hearing both sides and reviewing the case records, the Tribunal observed that conflicting views on the admissibility of CENVAT Credit on the items in question had been resolved by a Larger Bench decision. It was held that there was no intention to evade taxes or take wrong credit when conflicting views existed. Therefore, the demand for the period before the 2009 amendment was considered time-barred, and the Appellant's appeal regarding the CENVAT Credit for that period was allowed.
4. Decision on post-amendment demand:
Regarding the demand for the period after the 2009 amendment, the Tribunal noted that the Appellant had already reversed the CENVAT Credit along with interest. As a result, the appeal was allowed, and the penalty imposed on the Appellant was set aside.