2016 (9) TMI 125 - AT - Central Excise

Cenvat credit - duty paid in respect of various iron and steel articles - used for construction of civil structures as supporting structurals - Held that - in view of the decision of Larger Bench of Tribunal in the case of Vandana Global Ltd. Vs. CCE 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) which was considered by the Hon ble Gujarat High Court in the case of Mundra Ports & Special Economic Zone Ltd. 2015 (5) TMI 663 - GUJARAT HIGH COURT and stands over-ruled observing that the amendment issued on 7.7.2009 cannot be held to be clarificatory amendment and as such, would be applicable only retrospectively. As such, without going into the factual aspect as to whether the iron and steel articles were used for construction or as supporting structurals, we are of the view that the same would be entitled to credit inasmuch as the period in the present appeal is before 7.7.2009. Period of limitation - demand - Held that - the lower authorities have invoked the extended period only on the sole ground that the appellant was aware of the fact that the credit is not admissible and still, they took the credit. We find no appreciable reasons for observing so. Admittedly, the credit was being availed after reflecting the inputs in the statutory RG-23-D Part I and Part-II records. The fact of availment of credit was also being reflected in the statutory returns being filed with the Revenue. Non-disclosure of a fact for which there is no column in the records or in the returns, does not ipso facto lead to the conclusion that such non-disclosure is with malafide intention, especially, when there is no legal obligation on the part of the assessee to disclose a particular fact. Therefore, in view of the abve mentioned decisions, no malafide can be attributed to the assessee and longer limitation period would not be available to the Revenue. - Decided in favour of appellant with consequential rerief

Summary

Issues involved:
1. Denial of cenvat credit for iron and steel articles used in construction.
2. Applicability of the amendment in the Cenvat Credit Rules, 2004.
3. Imposition of penalty.
4. Interpretation of the retrospective effect of amendments.
5. Limitation period for demand.

Detailed Analysis:
1. The appellant was denied cenvat credit for duty paid on various iron and steel articles used in construction of civil structures. The demand was raised through a show cause notice dated 12.01.2007 for the period April, 2005 to October, 2005. The appellant contended that the items were used as supporting structurals, making them eligible for credit under the rules.

2. The appellant argued that the definition of "Inputs" in the Cenvat Credit Rules, 2004 was amended w.e.f. 7.7.2009, excluding such goods from credit eligibility. As the period in question was before this amendment, they claimed entitlement to the credit. The appellant also challenged the limitation on availing credit, asserting no malafide intention or suppression.

3. Lower authorities did not accept the appellant's arguments, confirming the demand and imposing a penalty. The appellant then appealed the decision.

4. The Tribunal referred to a Larger Bench decision in Vandana Global Ltd., stating that iron and steel articles used as supporting structurals were not modvatable items due to a clarificatory amendment effective from 7.7.2009. However, the Hon'ble Gujarat High Court in Mundra Ports & Special Economic Zone Ltd. held that the 7.7.2009 amendment was not clarificatory and should apply only retrospectively. Therefore, the iron and steel articles used by the appellant would be entitled to credit as the period in question was before 7.7.2009.

5. The demand was found to be barred by limitation as the show cause notice was issued on 12.01.2007 for a period from April, 2005 to October, 2005. The extended period was invoked based on the appellant's alleged awareness of inadmissible credit, despite reflecting the inputs in statutory records and returns. The Tribunal ruled that no malafide intention could be inferred, especially when previous decisions favored the assessee, and the law was clarified only later. Consequently, the appeal was allowed, setting aside the impugned order.