2018 (3) TMI 1882 - AT - Central Excise

Disallowance of CENVAT credit - procured capital goods from M/s. Inox Air Products Ltd. but retained the same in that condition in their factory in order to obtain a higher refund under N/N. 32/99-CE dated-8th July 1999 - HELD THAT - It is not in dispute that the goods have been procured on long term basis and the CENVAT Credit has been taken subsequently after assembling on the same invoices against which the goods were procured. From this it is clear that capital goods were delivered and received in the factory of the appellant in 2007-2008. While usage within the factory may well be a term use in the definition of Rule 3 of CENVAT credit Rules, 2004 which authorises the availment of credit specified and received in the factory. Accordingly, we hold that the eligibility for CENVAT Credit arises in 2007-2008 and these being capital goods, credit should have been availed in 2007-2008 and 2008-2009 - the refund amount of Rs. ₹ 15,95,332/- claimed during these two years was in excess of their entitlement and hence recovery thereof cannot be faulted. As far as the subsequent availment of CENVAT Credit is concerned, without findings of any eligibility for the excess amount claimed and refund arising from deferment of availment of credit, we hold that the entitlement of CENVAT Credit is not deniable. For this reason, recovery of that amount is not correct in law. The appeal of M/s. Premier Cryogenics Ltd. is allowed to the extent of setting aside the demand of Rs. ₹ 22,93,920/- while upholding the recovery of Rs. ₹ 15,95,332/- - Appeal allowed in part.

Summary

Issues:
1. Dispute over refund amount erroneously taken during 2007-2008 and 2008-2009.
2. Disallowance of CENVAT Credit in capital goods procured.

Analysis:
1. The dispute revolved around the refund demand of Rs. 15,95,332/- alleged to have been erroneously taken during the years 2007-2008 and 2008-2009, along with the disallowance of CENVAT Credit in capital goods amounting to Rs. 22,93,920/-. The appellant was accused of retaining capital goods in their factory to obtain a higher refund under a specific notification. The contention was whether the capital goods were utilized within the factory as required for availing CENVAT Credit.

2. The appellant argued that the definition of capital goods under the CENVAT Credit Rules, 2004 necessitated the deployment and usage of capital goods within the factory. They claimed that the capital goods were installed subsequently, following which the credit was availed. The appellant relied on a Supreme Court decision and the authorized representative cited a Tribunal decision to support their arguments regarding the timing of availing CENVAT Credit.

3. After considering the submissions, the Tribunal noted that the issue centered around when the CENVAT Credit should have been availed by the appellant. It was established that the capital goods were delivered and received in the factory in 2007-2008, and the credit was subsequently taken against the same invoices. The Tribunal held that the eligibility for CENVAT Credit arose in 2007-2008 and 2008-2009, and the refund claimed was in excess of the entitlement. However, the recovery of the excess amount was deemed incorrect in law due to the lack of findings regarding eligibility for the excess amount claimed. Thus, the recovery of Rs. 22,93,920/- was set aside, while the recovery of Rs. 15,95,332/- was upheld.