2014 (7) TMI 1281 - AT - Central Excise

CENVAT Credit - whether the appellant correctly availed CENVAT credit on certain items including machinery, spares, components and accessories etc. used for construction of various Mill Expansion Plants, embedded on the earth and thereby falling under the category of immovable property which cannot be treated as excisable goods? Held that - The Hon ble Karnataka High Court in the case of ICL Sugars Ltd. 2011 (4) TMI 1065 - KARNATAKA HIGH COURT allowed the credit on storage tanks as immovable property embedded on earth - Tribunal in the appellant s own case for earlier period, 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) , after considering the decision of Vandana Global Ltd. (supra), remanded the matter to the adjudicating authority. Matter remanded to the adjudicating authority for fresh decision in accordance with law - appeal allowed by way of remand.

Summary

Issues:
Determining correct availing of CENVAT credit on items for construction of Mill Expansion Plants falling under immovable property category.

Analysis:
The appellants, engaged in manufacturing Newsprint and Printing and Writing Paper, sought CENVAT credit on machinery, spares, components, and accessories used for constructing Mill Expansion Plants. The key issue was whether these items, embedded on earth, qualified as excisable goods. The appellant's counsel referred to a previous Tribunal order and decisions by the Karnataka High Court to support their claim.

The Revenue's representative argued that the current issue differed from the previous Tribunal order, which concerned credit denial on iron and steel items for supporting structures. In this case, the denial was on machineries embedded in the earth. After hearing both sides and reviewing the records, the Tribunal noted the Karnataka High Court's decision allowing credit on storage tanks as immovable property. The adjudicating authority's denial was based on a Tribunal's decision, which was also considered in the appellant's earlier case.

The Tribunal decided that the matter required re-examination by the adjudicating authority in light of the cited decisions and the actual use of the capital goods. Consequently, the impugned order was set aside, and the case was remanded to the adjudicating authority for a fresh decision in accordance with the law. The appellants were to be given a fair hearing before a new order was passed. The appeal was allowed for remand, emphasizing the need for a thorough review based on legal precedents and actual usage of the items in question.