2015 (9) TMI 1374 - AT - Central Excise

Denial of CENVAT Credit - Capital goods - Held that - According to the respondent, the steel items, in question, have been used in fabrication of the Coal Ground Hopper, Iron Ore Ground Hopper, Coal Crusher House, Conveyor System, Stock House, After Burning Chamber, Kiln Coller Transformer House etc., which according to the findings of the Commissioner (Appeals), are parts of the machinery and hence, are covered by the definition of capital goods. The grounds of appeal do not dispute the above uses of the steel items and in the grounds of appeal it is simply stated that the items fabricated are supporting structures. I do not accept this plea of the department, as from the nature of the items fabricated, it is clear that the same are component of the various machinery and hence, have to be treated as components of capital goods and accordingly, the steel items used in fabrication of the same would be eligible for Cenvat credit in terms of Rule 2(k) of the Cenvat Credit Rules, 2004. In any case, since on the issue involved in this case, there were conflicting decisions of the Tribunal, in view of the judgment of the Apex Court in the case of Continental Foundation Joint Venture (2007 (8) TMI 11 - SUPREME COURT OF INDIA), no mala fide can be attributed to the respondent and accordingly, the longer limitation period under proviso to Section 11A(1) would not be available to the department and the demand is time barred. - Decided against Revenue.

Summary

Issues:
1. Eligibility of Cenvat credit on steel items used for fabrication of certain structures.
2. Applicability of the extended period of limitation under proviso to Section 11A(1) of the Central Excise Act, 1944.

Eligibility of Cenvat Credit:
The case involved a dispute regarding the eligibility of Cenvat credit on steel items used for fabricating various structures. The Department contended that since the fabricated items were installed and fixed to earth structures, the materials used would not qualify for Cenvat credit. The Addl. Commissioner upheld this view and imposed a penalty. However, on appeal, the Commissioner (Appeals) set aside the order, stating that the items were used for fabrication of capital goods. The Department challenged this decision. The Departmental Representative argued that the steel items were not used for capital goods as they became fixed to earth structures after installation. He invoked the extended period of limitation under Section 11A(1) and cited a Tribunal judgment. The respondent's counsel argued that the steel items were indeed used for fabrication of capital goods and should be eligible for Cenvat credit under Rule 2(k) of the Cenvat Credit Rules, 2004. She also contended that the demand was time-barred due to conflicting decisions during the disputed period and cited a Supreme Court judgment.

Analysis of Eligibility Issue:
The Tribunal considered the submissions and records. It noted that the steel items were used in fabricating various parts like Coal Ground Hopper, Conveyor System, etc., which were deemed as parts of machinery by the Commissioner (Appeals). The Tribunal rejected the Department's argument that the fabricated items were supporting structures, emphasizing that they were components of machinery and thus qualified as capital goods. It also highlighted the conflicting Tribunal decisions on the issue during the disputed period. Citing the Supreme Court judgment, the Tribunal ruled that the longer limitation period could not be applied due to the absence of mala fide on the respondent's part. Consequently, it upheld the Commissioner (Appeals) decision, dismissing the Revenue's appeal.

Applicability of Extended Limitation Period:
The Department invoked the extended period of limitation under Section 11A(1) for non-disclosure of steel items' use. However, the Tribunal ruled that since conflicting decisions existed during the disputed period and no mala fide was established, the longer limitation period could not be applied. This decision was supported by a Supreme Court judgment, leading to the dismissal of the Revenue's appeal.

In conclusion, the Tribunal affirmed the eligibility of Cenvat credit on steel items used for fabricating machinery components and rejected the application of the extended limitation period under Section 11A(1) due to conflicting decisions and absence of mala fide, ultimately dismissing the Revenue's appeal.