2019 (8) TMI 1685 - AT - Central Excise

CENVAT Credit - capital goods - P.S.C. Railway Sleepers - Rails - Electrical items - HELD THAT - The assertion of the Ld. Advocate for the appellant to be correct as the Hon ble Supreme Court has settled the issue in the case of M/S JAYASWAL NECO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE RAIPUR 2015 (4) TMI 569 - SUPREME COURT as regards the availment of CENVAT Credit on rails and railway materials is concerned. The ratio of the Hon ble Supreme Court in the case squarely applies to the case on hand as well since the CENVAT Credit alleged to have been wrongly availed are on the very same items. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to demand of duty for irregular and ineligible CENVAT Credit on specific items as 'capital goods' under CENVAT Credit Rules, 2004.

Detailed Analysis:

1. Allegations and Show Cause Notice:
- A Show Cause Notice was issued alleging irregular CENVAT Credit availed on P.S.C. Railway Sleepers, Rails, and Electrical items as 'capital goods' contrary to CENVAT Credit Rules, 2004.
- The notice highlighted that the items were used for transportation within the factory premises and did not qualify as capital goods as per the rules.

2. Adjudication and Order-in-Original:
- Despite the appellant's detailed reply, the Adjudicating Authority disallowed the CENVAT Credit and ordered recovery of duty, interest, and penalty.

3. Appellant's Arguments:
- The appellant cited the Supreme Court's decision in M/s. Jayaswal Neco Ltd. case, emphasizing the integral use of railway tracks in the manufacturing process.
- Referring to a Tribunal decision, the appellant reinforced the applicability of the Supreme Court's ruling.

4. Revenue's Position:
- The Departmental Representative supported the lower authority's findings but failed to differentiate from the Supreme Court's precedent.

5. Tribunal's Decision:
- The Tribunal, after reviewing the Show Cause Notice and the Supreme Court's decision, agreed with the appellant's position.
- Citing the settled issue by the Supreme Court, the Tribunal set aside the impugned order and demand, allowing the appeal with consequential benefits.

6. Conclusion:
- The Tribunal concluded that the demand for duty based on irregular CENVAT Credit could not be sustained, aligning with the Supreme Court's ruling on the issue.
- The appeal was allowed, providing consequential benefits as per the law.

This comprehensive analysis outlines the legal journey from the initial allegations to the final judgment, emphasizing the interpretation and application of relevant legal principles and precedents in resolving the dispute over CENVAT Credit eligibility.