2019 (7) TMI 1774 - AT - Central Excise

CENVAT Credit - exempt goods or not - storage tank of (300 KL) installed in the factory premises of the Appellant - denial of credit on the ground that the same was used for storage of medical grade Oxygen which is exempt - HELD THAT - The documentary evidence has been adduced by the Appellant regarding use of storage tank both for storage of industrial grade oxygen and medical grade oxygen. Therefore the charge of the Department regarding exclusive use of this tank for storage of goods which exempt from payment of duty is not sustainable - credit allowed. CENVAT Credit - capital goods - capital goods were not put to use on 01.01.2009 before the Appellant applied for area based exemption on 10.06.2003 - HELD THAT - Once cenvat credit is admissible at the time of receipt of the capital goods the same cannot be denied for the subsequent use for manufacture of exempted goods. This issue is settled by the decision of Larger Bench of this Tribunal in case of SPENTA INTERNATIONAL LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE THANE 2007 (8) TMI 25 - CESTAT MUMBAI . As the issue is settled in the favour of the Appellant by the decision of Larger Bench of this Tribunal followed by other decisions the appellant is entitled for the credit and the finding of Commissioner in the impugned order is not sustainable - Credit allowed. CENVAT Credit - capital goods - angles channels etc. for making structural support for the capital goods - HELD THAT - The definition of capital goods under Rule 2(a) of Credit Rules includes components spares and accessories of capital goods by applying the user test as held by the Apex Court in COMMISSIONER OF CENTRAL EXCISE JAIPUR VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS LTD. 2010 (7) TMI 12 - SUPREME COURT the credit cannot be denied - Credit allowed. CENVAT Credit - denial on the ground that the Bills of Entries is not in the name of the Appellant (i.e. unit at Roorkee) but was in the name of Alwar Unit and thus no valid document under Rule 9(1)(c) of the Credit Rules - HELD THAT - here is no dispute regarding receipt of the capital goods in the factory of the Appellant and the same has been put to use in the manufacture of dutiable goods the credit cannot be denied on merely technical breach of procedure. The Central Board of Excise and Customs vide above circular as permitted the endorsement of bill of entry when receive from their head office - The goods have been received by the Appellant unit in Roorkee which is not disputed and that too on valid documents endorsed B/Es. In view of above the impugned order is not legally sustainable and therefore set aside. CENVAT Credit - non production of the documents at the strength of which such credit were availed under the Credit Rules - HELD THAT - Appellant does not dispute the fact that the documents were not made available to the audit team on account of the fact that the same were old and not traceable. Ld. Counsel as submitted the compilation of such document for our perusal - on perusal of the documents it is found that the input/capital goods imported or ingeniously procured have been received by the Appellant and the credit has been taken accordingly. Matter remanded to adjudicating authority to get the document verified that has been produced and consider the availability of cenvat credit to the Appellant in terms of credit rules and pass an appropriate order - appeal allowed by way of remand.

Summary

Issues:
1. Admissibility of Cenvat Credit on various input services and capital goods for the manufacture of exempted products.
2. Denial of Cenvat Credit on storage tank used for medical grade Oxygen.
3. Admissibility of Cenvat Credit on capital goods not put to use before applying for exemption.
4. Denial of Cenvat Credit on structural support components.
5. Validity of Bills of Entries for availing Cenvat Credit.
6. Non-production of documents for availed Cenvat Credit.

Analysis:
1. The appeal challenged the confirmation of Cenvat credit denial by the Commissioner for the period 2006-07 to 2008-09. The dispute revolved around the admissibility of Cenvat Credit on various inputs and capital goods used for manufacturing exempted products. The Appellant, engaged in industrial gases production, contested the denial based on invalid documents, non-production of documents, and the use of capital goods for exempted products' manufacture.

2. The first issue concerned the denial of Cenvat Credit on a storage tank used for medical grade Oxygen storage. The Appellant argued that the tank was initially used for industrial grade Oxygen storage before shifting to medical grade Oxygen. The Tribunal, after reviewing the evidence, held in favor of the Appellant, citing previous decisions supporting their claim.

3. The next issue addressed the denial of Cenvat Credit on capital goods not put to use before applying for exemption. The Appellant relied on precedents to support their claim that credit should be determined at the time of receipt of goods, not post-use for exempted goods. The Tribunal agreed with the Appellant, overturning the Commissioner's decision.

4. Another issue involved the denial of Cenvat Credit on components used for structural support of capital goods. The Tribunal sided with the Appellant, referencing the definition of capital goods under Credit Rules and a High Court decision to support their decision.

5. The validity of Bills of Entries for availing Cenvat Credit was also contested. The Appellant argued that the goods were received and used in their unit, despite the Bills of Entries being in another unit's name. The Tribunal agreed with the Appellant, emphasizing the receipt and use of goods in the Roorkee unit, setting aside the denial.

6. Lastly, the issue of non-production of documents for availed Cenvat Credit was addressed. The Appellant acknowledged the unavailability of some old documents but presented a compilation for verification. The Tribunal remanded the matter to verify the documents and consider the availability of Cenvat Credit to the Appellant, deciding in favor of the Appellant on other issues.

This detailed analysis covers the various issues raised in the legal judgment, highlighting the arguments, decisions, and legal precedents considered by the Tribunal in each instance.