2016 (9) TMI 35 - AT - Central Excise

Capital goods CENVAT credit - HR Plates MS Beams Hot Rolled Plates MS Billets - used for constructing the chimney attached to the furnace - Held that - by following the decision of Hon ble High Court of Chhattisgarh in the case of Union of India Vs. Associated Cement Company Ltd. 2010 (10) TMI 550 - CHHATTISGARH HIGH COURT where credit has been allowed on steel material used in the fabrication of chimney for Diesel Generating set the credit of steel material used for fabrication/construction of chimney is admissible as CENVAT Credit. Cenvat credit - Asbestos Cement Sheets - used for construction of roof of the factory - Held that - by following the decision of Hon ble High Court of Allahabad in the case of M/s. Daya Sugar Versus Commissioner Central Excise Meerut-1 2014 (10) TMI 722 - ALLAHABAD HIGH COURT the credit of asbestos sheet is not admissible. Refund claim - matter concerning admissible of credit is not finalized - refund is premature - Held that - the Tribunal has finalized the admissibility of credit therefore I set aside the order of rejection of refund claim and direct the original adjudicating authority to grant consequential relief. - Decided partly in favour of assessee

Summary

Issues:
1. Disallowance of capital goods CENVAT Credit on specific items used for construction.
2. Rejection of refund claim for restoration of credit.
3. Admissibility of CENVAT Credit on goods used for construction based on legal precedents.
4. Bar on refund claim due to premature filing.

Analysis:
1. The appellants were issued a notice to disallow capital goods CENVAT Credit on various items like HR Plates, MS Beams, Hot Rolled Plates, MS Billets used for constructing the chimney and Asbestos Cement Sheets used for the factory's roof. The lower authorities denied the credit, leading the appellants to appeal before the Tribunal.

2. The appellants had initially paid/reversed certain amounts and filed a refund claim for restoration of credit. However, the refund claim was rejected as premature since the Revenue had issued a notice for recovery of the credit. The lower authorities also rejected the refund claim, prompting the appellants to approach the Tribunal.

3. The appellant's counsel cited legal precedents to support their case. They referenced cases where credits for goods used in similar construction scenarios were allowed, emphasizing decisions from the Tribunal and High Courts. The arguments focused on the admissibility of credit for steel materials used in chimney fabrication but lacked specific case law for Asbestos sheets used in the factory's roof.

4. The Tribunal analyzed the arguments and legal precedents presented by both sides. It noted that while the credit for steel materials used in chimney construction was admissible based on a High Court decision, the credit for Asbestos sheets used in the factory's roof was not allowed according to another High Court ruling. The Tribunal also addressed the issue of the premature rejection of the refund claim, overturning the decision and directing the adjudicating authority to grant consequential relief now that the admissibility of credit was finalized.

In conclusion, the Tribunal partially allowed both appeals, permitting the CENVAT Credit for steel materials used in construction while denying the credit for Asbestos sheets. The premature rejection of the refund claim was set aside, emphasizing the importance of finalizing the admissibility of credit before making such decisions.