2016 (2) TMI 635 - AT - Central Excise

Cenvat credit of Central Excise duty paid on cement denied - Held that - It is an admitted fact on record that the receipt of disputed goods in the appellant s unit and the duty paid character of those goods have not been disputed either in the Original or in the Appellate Order. Thus, denial of cenvat credit for mere technical lapse of non-obtaining the registration certificate at the time of issuance of invoice, cannot be a defensible ground to deny the cenvat credit. Thus, it is of the view that cenvat credit being a beneficial piece of legislation intended for arresting the cascading effect, cannot be denied to the appellant, in view of the fact that the disputed goods have suffered duty and have received/used in the appellant s factory for production of the final product. However, the cenvat credit of Central Excise duty paid on cement is not available to the appellant, owing to the fact that the same cannot be considered as input for manufacture/production of the final product. Thus, the appellant is liable to reverse the cenvat credit alongwith interest taken on cement. Since taking of cenvat credit on cement is not attributable to fraud, collusion etc. with intention to evade payment of duty, it is of the view that imposition of penalty is not justified. In view of the above, the appeal is partly allowed to the extent of allowing cenvat credit to the disputed goods other than cement taken by the appellant. The appellant is liable to reverse Cenvat Credit taken on cement and also to pay interest for wrongly availed Cenvat Credit.

Summary

Issues:

1. Availment of Cenvat credit on disputed goods for the period March, 2011.

Analysis:

The case involved the appellant engaged in mining and selling coal, availing Cenvat credit of Central Excise duty paid on inputs and capital goods for discharging duty on the finished product. The dispute arose regarding the availment of Cenvat credit on disputed goods for March, 2011. The Central Excise Department issued a Show Cause Notice denying the Cenvat credit of a specific amount, alleging improper use and timing of registration by the appellant.

The matter was adjudicated by the Additional Commissioner, who confirmed the Cenvat demand, interest, and imposed a penalty. The Commissioner (Appeals) upheld the demand. The appellant appealed to the Tribunal, presenting arguments on the nature of use of the disputed goods in the factory premises. The appellant contended that the disputed goods were essential for mining activities and should be eligible for Cenvat credit.

During the proceedings, the appellant demonstrated the usage and purpose of each disputed item, emphasizing their integral role in the mining process. The Department, represented by the DR, maintained that the goods did not qualify as inputs or capital goods, thus challenging the appellant's eligibility for Cenvat credit. However, the Tribunal observed that the disputed goods were indeed used in the manufacturing process of coal, essential for mining activities, and not falling under excluded categories specified in the definition of inputs.

The Tribunal concluded that Cenvat credit could be extended to the disputed goods, except for cement, which was deemed ineligible as an input for the final product. The denial of credit based on a technical lapse of registration certificate issuance was deemed unjustified. The Tribunal allowed the appeal partially, permitting Cenvat credit on disputed goods other than cement. The appellant was directed to reverse the credit on cement and pay interest accordingly, without imposing a penalty due to the absence of fraudulent intent.

In summary, the Tribunal ruled in favor of the appellant, allowing Cenvat credit on disputed goods essential for mining activities, except for cement, and directed the reversal of credit and payment of interest on cement without penalty.