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2016 (1) TMI 1059 - AT - Central ExciseCenvat Credit - eligible inputs - rails and other track materials, namely, sleepers, paints and crossings etc. - Revenue contended that the goods in question do not merit inclusion in the category of inputs as the same do not go into the mainstream of the process of manufacture either directly or indirectly, nor included in the list of goods mentioned in the definition of Rule 2(g) of CENVAT Credit Rules, 2002. Held that - Since the department has accepted the admissibility of CENVAT Credit on rails and railway track materials involving the same assesse i.e. M/s SAIL, for subsequent period under the CCR,2004 and identical issue is also involved in M/s Tata Steel s case, therefore, adopting the principle of certainty & consistency in tax matters, in our view, the Appellants are eligible to credit on rails and railway track materials. Consequently, the discussion on the applicability of the said judgment to the present CENVAT Credit Rules, 2004 and other contentions raised in these Appeals would become more of academic in nature rather than resolving the dispute, hence not resorted to. - Credit allowed - Decided in favor of assessee.
Issues Involved:
1. Eligibility of CENVAT Credit on rails and other track materials as inputs or capital goods. 2. Interpretation of the definition of 'inputs' and 'capital goods' under CENVAT Credit Rules, 2002/2004. 3. Consistency in tax matters and applicability of previous judgments. Detailed Analysis: 1. Eligibility of CENVAT Credit on Rails and Other Track Materials as Inputs or Capital Goods: The core issue revolves around whether rails and other track materials used within the factory premises qualify for CENVAT Credit either as inputs or capital goods. The appellants, M/s Tata Steel and M/s SAIL, claimed CENVAT Credit on these items, arguing that they are essential for the transportation of raw materials, semi-finished, and finished goods within the factory, thus integrally connected to the manufacturing process. In Tata Steel's case, the department issued a show cause cum demand notice alleging irregular availment of CENVAT Credit on rails and sleepers as inputs and capital goods, which was confirmed with interest and penalty. Similarly, SAIL's appeals involved claims of CENVAT Credit on rails used in their internal railway network, which were shown as fixed assets in their balance sheets. The department contended that these items did not qualify as inputs or capital goods under the relevant rules. The appellants argued that the use of these materials is directly or indirectly connected to the manufacturing process, referencing the Supreme Court's judgment in Jayaswal Neco Ltd. v. CCE, which held that such materials are eligible for CENVAT Credit. 2. Interpretation of the Definition of 'Inputs' and 'Capital Goods' Under CENVAT Credit Rules, 2002/2004:The appellants contended that under Rule 2(g) of CENVAT Credit Rules, 2002, items used in or in relation to the manufacture of final products, whether directly or indirectly, qualify as inputs. They argued that the railway track materials, used for moving raw materials and finished products within the factory, meet this criterion. They also cited the Supreme Court's ruling in Vikram Cement v. CCE, which equated the MODVAT and CENVAT schemes, supporting their claim for credit. The Revenue, however, argued that the definition of capital goods under the CENVAT Credit Rules, 2002/2004, is restrictive and chapter-specific, excluding items like rails classified under Chapter 73 of CETA, 1985. They contended that the appellants' claim of these materials as inputs was inconsistent with their classification as fixed assets in financial statements. 3. Consistency in Tax Matters and Applicability of Previous Judgments:The Tribunal noted that the principle of consistency in tax matters, as emphasized by the Supreme Court in cases like Birla Corporation Ltd. v. CCE and Amar Bitumen and Allied Products, mandates that the Revenue cannot take contradictory stands in similar cases involving the same or different assessees. The Tribunal highlighted that the Commissioner of Central Excise, Ranchi, had accepted the eligibility of CENVAT Credit on similar materials for subsequent periods in M/s SAIL's case, following the Supreme Court's judgment in Jayaswal Neco Ltd. Given this precedent and the acceptance of similar claims by the department for subsequent periods, the Tribunal ruled in favor of the appellants, allowing CENVAT Credit on rails and railway track materials. The Tribunal emphasized the need for certainty and consistency in tax matters, setting aside the impugned orders and allowing the appeals with consequential relief as per law. Conclusion:In conclusion, the Tribunal allowed the appeals by M/s Tata Steel and M/s SAIL, granting them CENVAT Credit on rails and railway track materials used within their factories. The Tribunal rejected the Revenue's appeals, emphasizing the importance of consistency in tax rulings and the applicability of the Supreme Court's judgment in Jayaswal Neco Ltd. to the present cases. (Pronounced in the open court on 05.01.2016.)
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