2016 (6) TMI 400 - AT - Central Excise

Cenvat Credit on various MS items - disallowance of claim as they are used only as supporting structures to support boilers, its components and accessories - Held that - It is an admitted fact that during the period of dispute there has been large number of litigation regarding eligibility or otherwise of similar set of items for various accesses under Cenvat Credit Rules, 2002/2004. As seen from the decision of the Tribunal in Vandana Global Ltd. vs CCE, Raipur reported (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) ), the eligibility in these type of items for credit have been a subject matter of large number of decisions. Examining all these, the Tribunal arrived at the decision that goods like cement and steel items used for laying foundation and for building support structure cannot be treated either as inputs for capital goods or as inputs. Considering these factual position, it is not tenable to hold that the respondent suppressed material facts and intended to evade payment of duty. Further, admittedly the respondents have been filling the statutory returns with full particulars as specified therein which also included the disputed credits. As such, the demand in the present case is also hit by time bar. - Decided against revenue

Summary

Issues:
1. Denial of Cenvat credit on Iron and Steel items used for supporting boiler and its components.
2. Interpretation of the definition of inputs under Rule 2 (k) (iii) of Cenvat Credit Rules, 2004.
3. Time bar for the demand of Cenvat credit.

Analysis:

Issue 1: Denial of Cenvat credit on Iron and Steel items:
The appeal pertains to the denial of Cenvat credit on Iron and Steel items used for supporting a boiler and its components. The Original Authority had denied the credit and imposed a penalty on the respondent. However, the Commissioner (Appeals) set aside the original order and allowed the appeal on merits. The Tribunal had earlier dismissed the appeal filed by the Revenue, stating that the demand was hit by limitation. The Hon'ble High Court of Chhattisgarh remanded the matter back to the Tribunal for a detailed order. The Tribunal, after examining the issue, found that the items were not merely supporting structures but were integral parts of the fabrication and operation of the boiler and its components. The Tribunal concluded that the findings of the Adjudicating Authority were incorrect, and there was no reason to interfere with the impugned order on merits.

Issue 2: Interpretation of the definition of inputs under Rule 2 (k) (iii) of Cenvat Credit Rules, 2004:
The Revenue argued that the supporting structures were excluded from the definition of inputs under the relevant Rule. They relied on a Circular issued by the Board in support of their argument. However, the Counsel for the respondent contended that the first Appellate Authority had thoroughly examined the issue with supporting documents and legal provisions, finding in favor of the respondent. The Tribunal, after considering the arguments and evidence presented, upheld the decision of the Commissioner (Appeals) and rejected the Revenue's appeal.

Issue 3: Time bar for the demand of Cenvat credit:
The respondent argued that the demand was barred by limitation due to the large number of litigations regarding similar items under Cenvat Credit Rules. Referring to previous decisions, the Tribunal concluded that the demand was time-barred as the respondent had not suppressed any material facts and had filed statutory returns with full particulars. The Tribunal found that the demand was hit by time bar, further solidifying the rejection of the Revenue's appeal.

In conclusion, the Tribunal rejected the appeal by the Revenue, emphasizing that the items in question were essential for the operation of the boiler and its components, and the demand for Cenvat credit was time-barred based on the circumstances of the case.