2016 (3) TMI 1040 - AT - Central Excise

Cenvat credit denied - various items namely aluminium coils, S.S. Sheets, plates channels, M.S. angles etc. - revenue has declined to accept them as capital goods - Held that - Keeping in view the law laid down by the Hon ble High Courts and the Supreme Court in Rajasthan Spinning & Weaving Mills 2010 (7) TMI 12 - SUPREME COURT OF INDIA and M/s. Lloyds Metals and Engg Ltd. 2014 (8) TMI 913 - CESTAT MUMBAI , it is of the considered view the appellants are entitled to CENVAT Credit on all the items mentioned above and the impugned order denying the CENVAT Credit solely on the basis of law laid down by the Larger Bench in the case of M/s. Vandana Global Limited (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) ) is wrong. Extended period of limitation invoked - Held that - After going through the various judgments cited by the ld. Counsel for the appellants on limitation, wherein the various benches of the Tribunal has held that when the same provision of law is subject to various interpretation by different benches, then in that situation, extended period of limitation should not be invoked. As in that situation, no malafide can be attributed on the part of the appellants so as to justify invoking the longer period of limitation. Therefore, on limitation also I find that the entire demand except ₹ 14,206 is beyond limitation.

Summary

Issues Involved:
1. Eligibility of CENVAT Credit on capital goods.
2. Interpretation of amendments to Rule 2(a) and Rule 2(k) of CENVAT Credit Rules, 2004.
3. Applicability of the extended period of limitation for demand.

Detailed Analysis:

1. Eligibility of CENVAT Credit on Capital Goods:
The core issue revolves around whether items like aluminium coils, S.S. Sheets, plates channels, and M.S. angles, used for fabricating process equipment, reactor vessels, and storage tanks, qualify as "capital goods" under Rule 2(a) of the CENVAT Credit Rules, 2004. The appellant argued that these items are integral to the manufacturing process and should be classified as capital goods. The Commissioner (Appeals) had denied this credit based on the judgment in M/s. Vandana Global Limited, which held that the definition of 'input' was amended with retrospective effect to exclude such items.

2. Interpretation of Amendments to Rule 2(a) and Rule 2(k) of CENVAT Credit Rules, 2004:
The appellant contested the reliance on M/s. Vandana Global Limited, arguing that the amendment to the definition of 'input' effective from 07.07.2009 was not clarificatory but prospective. This view was supported by the Hon'ble Gujarat High Court in M/s. Mundra Ports and Special Economic Zone Ltd. and the Hon'ble Calcutta High Court in M/s. Surya Alloy Industries Ltd., which found no legislative intent for retrospective application. The Tribunal in M/s. Lloyds Metals and Engg Ltd. also supported the appellant's stance, emphasizing that the Supreme Court's decision in Rajasthan Spinning & Weaving Mills Ltd. prevails, allowing CENVAT Credit for items used in setting up capital goods.

3. Applicability of the Extended Period of Limitation for Demand:
The appellant argued that the demand is time-barred, except for a minor portion within the limitation period. They cited various judgments indicating that when legal provisions are subject to multiple interpretations, extended periods of limitation should not apply. The Tribunal in M/s. Megafine Pharma Pvt. Ltd. and other cited cases supported this view, stating that no malafide intent can be attributed in such scenarios, thus invalidating the extended period for demand.

Conclusion:
The Tribunal concluded that the appellant is entitled to CENVAT Credit on the disputed items, aligning with the law laid down by the Hon'ble High Courts and the Supreme Court. The reliance on M/s. Vandana Global Limited was deemed incorrect. On the issue of limitation, the Tribunal found that the extended period should not be invoked due to varying interpretations of the law, thereby setting aside the demand except for Rs. 14,206/- within the limitation period. The impugned order was thus set aside, and the appeals were allowed with consequential relief.