2015 (10) TMI 1545 - AT - Central Excise

Availment of CENVAT Credit - capital goods / moulds were not available during the next year - appellant has availed 50% Cenvat credit under capital goods on C.I. Moulds at the time of receipt and subsequent 50% was availed in the subsequent financial year - Held that - There is no dispute in the fact that appellant has availed Cenvat Credit in respect of C.I. Moulds to the extent of 50% at the time of receipt thereof and balance 50% was availed in the subsequent financial year. At the time of taking balance 50% credit in the subsequent financial year, the mould is neither in the possession of the appellant nor the same was in use as same were consumed or become waste after use and said waste have been cleared from the factory. Under these set of undisputed facts in term of Rule 4(2)(b) the balance of 50% credit is not admissible to the appellant - balance 50% Credit can be taken only in case where such capital goods is in possession of the assessee and also in use. In the present case since at the time of taking remaining 50% credit, moulds were not available with the appellant Cenvat credit of remaining 50% was correctly disallowed. This position has been made clear in the judgments of Silver Ispat (P) Ltd. 2008 (5) TMI 104 - CESTAT MUMBAI and Sri Krishna Alloys (2006 (1) TMI 411 - CESTAT, CHENNAI) as cited by Ld. A.R. In view of this settled legal position and Board clarification the appellant is not entitled for Cenvat Credit to the extent of remaining 50% therefore impugned order is upheld - Decided against assessee.

Summary

Issues:
- Availment of Cenvat credit on capital goods
- Interpretation of Rule 4(2)(b) of Cenvat Credit Rules, 2002

Analysis:
1. The appeal challenged an Order-in-Appeal that upheld an order-in-original regarding the appellant's availing of 50% Cenvat credit on C.I. Moulds. The appellant took the remaining 50% credit in a subsequent financial year, but the moulds became defective and were cleared as waste. The Revenue contended that as per Rule 4(2)(b) of Cenvat Credit Rules, 2002, the balance of credit can only be taken when the capital goods remain in possession and use. A show cause notice led to a demand for credit amounting to Rs. 1,57,008/-, a penalty of Rs. 20,000/-, and interest under relevant rules.

2. Despite the absence of the appellant during the hearing, the matter was considered for disposal on merit.

3. The Revenue reiterated that the appellant was not entitled to the balance 50% credit as the moulds were not in possession or use, citing a Board Circular and previous tribunal judgments. The appellant's lack of possession and use of the moulds rendered them ineligible for the remaining credit.

4. The Tribunal, after reviewing the submissions and records, concluded that the appellant had availed 50% credit initially but was not entitled to the remaining 50% credit as the moulds were not in possession or use during the subsequent financial year. Rule 4(2)(b) stipulates that the balance credit can only be taken if the capital goods are in possession and use, which was not the case here. Citing previous judgments and the Board's clarification, the Tribunal upheld the impugned order, dismissing the appellant's appeal.