2016 (9) TMI 422 - AT - Central Excise

Cenvat credit - various inputs - period involved is from 01.04.2007 to 30.04.2009 - duty paying documents were not having full and complete address of the appellants - some items were not classifiable as Capital Goods in terms of Cenvat Credit Rules, 2004 - Held that - it is found that the duty has been discharged by the appellants and there is no allegation that the goods have been diverted. No credit has been availed by Unit-I located in the same address across the road. Therefore, when all the substantial conditions have been admittedly fulfilled, we find no legal justification in denying credit on mere technicalities. In view of the various decided cases and also in view of the fact that Rule 9 itself recognizes that the Assistant Commissioner may allow the credit even if the duty paid documents do not contain all the particulars but contain essential details like duty payable, description of goods, value, registration number of issuing person etc., we find no justifiable reason for denial of credit on inputs in the present case. Cenvat credit - capital goods like Asbestos, Gasket Sheets, Chequered Plates - classification not fitting into the category of Capital Goods in terms of Rule 2(a) of Cenvat Credit Rules, 2004 - Held that - the nature of usage, as submitted by the appellants, that these are, in fact, used along with other capital goods for joining the pipes or fabricating the solvent recovery plant, and as such their use justifies their categorization as Capital Goods . Therefore, by following the judgment of Hon ble Supreme Court in the case of Rajasthan Spinning & Weaving Mills 2010 (7) TMI 12 - SUPREME COURT OF INDIA , the appellants are eligible for the credit on these items. Cenvat credit - other capital goods - ECC Code of the appellants was not figuring in the duty paid documents - Held that - it is found that denial of credit only on the ground of ECC Code, originally not available in the documents, cannot be sustained. In any case, the said document contained all other relevant details and the ECC Code has been rectified by the suppliers on the request of the appellants. In the absence of any other ground for denial of credit, we find that the substantial benefit of credit on Capital Goods cannot be denied on this procedural ground. - Decided in favour of appellant

Summary

Issues:
Denial of Cenvat Credit on various inputs and capital goods availed by the appellants during a specific period.

Analysis:
The appeal challenged the denial of Cenvat Credit amounting to ?9,71,21,082/-, with ?8,63,52,628/- relating to credit on inputs and ?1,07,67,636/- on capital goods. The denial was based on incomplete duty paying documents lacking the full address of the appellants and the classification of certain capital goods. The appellant argued that all inputs and capital goods were received and used in manufacturing dutiable products without diversion, fulfilling all Cenvat Credit Rules requirements. They contended that denial based on technicalities like missing "Unit-II" endorsement on documents was unjustified. The appellant cited legal precedents to support their case.

The appellant also argued against the denial of credit on certain capital goods, emphasizing their usage in specific manufacturing processes justifying their classification as 'Capital Goods.' They challenged the denial based on ECC Code absence, stating it was rectified and should not affect credit eligibility. The appellate tribunal analyzed the submissions, citing legal precedents like the 'User Test' for capital goods classification. They concluded that denial based solely on technical grounds like missing ECC Code or 'Unit-II' mention was not justified, as the essential criteria for credit eligibility were met.

The tribunal noted that the denial of credit on specific capital goods supplied by Sulzer India and imported items lacking 'Unit-II' indication in bills of entry was not substantial enough to justify denial. They emphasized that the denial lacked evidence affecting the eligibility of capital goods or their duty paid nature. Ultimately, the tribunal set aside the impugned order, allowing the appeal based on the detailed analysis and legal principles cited during the proceedings.

In conclusion, the judgment highlighted the importance of fulfilling essential criteria for Cenvat Credit eligibility, emphasizing substance over technicalities in documentation. The tribunal's decision was based on legal precedents and a thorough analysis of the appellant's arguments, ultimately setting aside the denial of credit on inputs and capital goods.