2016 (11) TMI 927 - AT - Central Excise

CENVAT credit - steel items - diesel generator - input services for construction of compound wall - whether the appellant is eligible for the credit availed on the steel items used for making the Surface Testing Bench? - Held that - Chapter 90 of the CETA 1985 shows the entry of Surface Testing Bench at 90312000. Therefore the said item falls within the definition of capital goods and therefore the denial of credit is unjustified. Whether steel shots are capital goods or not and whether credit is admissible on MS items used for steel shots? - Held that - The issue stands decided in the cases/judgments relied upon by the learned counsel for the appellant. In Mukand Ltd. vs. CCE, Mumbai-II 2005 (8) TMI 561 - CESTAT, MUMBAI , the Tribunal has analysed the issue and held in favour of assessee, where it was held that whether it is not disputed that the Sted Shot used in or relation to manufacture of the final products, Modvat credit is admissible irrespective of the fact whether they are capital goods or not under Rules 57A and 57Q of the Central Excise Rules, 1944. Denial of credit on the diesel generator set - Held that - As per the proviso to Rule 9(2) of the CENVAT Credit Rules, in case of any doubt with regard to the particulars mentioned in the invoice, the concerned officer on being satisfied that the credit/duty has been properly accounted for has the discretion to allow the credit. When the Department has no dispute with regard to the receipt of the generator within the factory or with regard to the payment of duty, in my view, the denial of credit is unjustified. Appeal allowed - CENVAT credit allowed - decided in favor of appellant.

Summary

Issues:
1. Disallowance of CENVAT credit on duty paid on steel items and diesel generator.
2. Eligibility of credit on MS plates, angles, and diesel generator under the category of capital goods.
3. Dispute over the denial of credit on input services for the construction of a compound wall.

Analysis:
1. The appellant challenged the disallowance of CENVAT credit on steel items and a diesel generator by the Commissioner (Appeals). The original authority disallowed credit on all counts, but the Commissioner allowed credit on input services for the construction of a compound wall while disallowing credit under the category of capital goods. The appellant contended that steel items were used for making Surface Testing Bench, falling under Chapter 90 of CETA, making them eligible for credit. The issue of credit on steel shots and the generator was also raised.

2. The appellant argued that the steel items used for the Surface Testing Bench should be considered capital goods based on relevant case law. The Tribunal found that the items fell within the definition of capital goods under Chapter 90 of CETA, thus justifying the credit. The issue of steel shots being capital goods was also addressed, with the Tribunal citing precedent to support the appellant's claim.

3. Regarding the denial of credit on the diesel generator, the appellant explained that the generator was initially supplied to another unit and later transferred to their factory due to unforeseen circumstances. The invoice discrepancy was addressed, noting that the generator was received at the appellant's factory and duty was paid. The Tribunal found the denial of credit unjustified, as the generator was properly accounted for, and the factory where it was initially intended for use did not commence operations.

In conclusion, the Tribunal held that the disallowance of credit lacked a basis, setting aside the impugned order and allowing the appeal with consequential reliefs. The judgment emphasized the eligibility of credit on steel items used for specific purposes, clarified the classification of capital goods, and addressed discrepancies related to the diesel generator credit denial.