2017 (1) TMI 86 - AT - Central Excise

CENVAT credit - MS plates, Channels, Joists, Angles, Beams, HR Coils etc - irregular availment - suppression of facts - time bar - Held that - I find that the notice has been issued basing on the ER 1 returns. This itself shows that the appellant has disclosed the details of availing credit and therefore, there is no evidence to establish any suppression on the part of the appellant - As the issue whether the credit is admissible on MS items used for fabrication of capital goods /structural support was contentious during the relevant period, I find that the extended period is not invokable. The demand is held to be time barred - appeal allowed - decided in favor of appellant.

Issues:
1. Eligibility of Cenvat credit on MS items used for fabrication of capital goods.
2. Validity of show cause notice invoking extended period of limitation.
3. Suppression of facts by the appellant.

Analysis:

Issue 1: Eligibility of Cenvat credit on MS items used for fabrication of capital goods:
The appellant, engaged in manufacturing MS ingots, availed Cenvat credit on MS plates, Channels, Joists, Angles, Beams, HR Coils. The appellant argued that the MS items were used for fabrication of various structures such as induction furnace, gantry crane, and pollution equipment, making them eligible for credit. The appellant cited precedents like M/s India Cements Ltd. Vs CESTAT, Chennai, CCE Bangalore Vs M/s SLR Steels Ltd., and CCE, Jaipur Vs M/s Rajasthan Spinning and Weaving Mills Ltd. to support their claim. The department contended that when MS items are fixed to earth and become immovable as part of plant and machinery, they are not eligible for credit. The Tribunal, after considering the arguments and precedents, held that MS items used for fabrication of capital goods are indeed eligible for credit. The show cause notice was based on the ER-1 returns filed by the appellant, indicating no suppression of facts, and the demand was considered time-barred. The impugned order confirming the demand was set aside, and the appeal was allowed.

Issue 2: Validity of show cause notice invoking extended period of limitation:
The appellant contested the validity of the show cause notice issued for the period 10/2004 to 6/2008, invoking the extended period of limitation. The appellant argued that since they had disclosed the details of availing credit in the ER-1 returns, there was no suppression or wilful mis-declaration of facts. The department relied on the decision in Vandana Global Ltd. case to support the extended period. However, the Tribunal referred to the case of CCE & CCE, Vizag Vs APP Mills and M/s Ultra Tech Cement Vs CCE, Ripur, highlighting that the view of the Larger Bench in Vandana Global case was no longer valid post the decision in Rajasthan Spinning and Weaving Mills case. Consequently, the Tribunal held that the extended period was not applicable in this scenario, rendering the demand time-barred.

Issue 3: Suppression of facts by the appellant:
The Tribunal found that since the appellant had disclosed the details of availing credit in the ER-1 returns, there was no evidence of suppression or wilful mis-declaration of facts. The appellant's compliance with filing returns negated any allegations of concealment, leading to the conclusion that the extended period of limitation was not justified. As a result, the demand raised against the appellant was deemed time-barred, and the appeal was allowed, providing consequential reliefs if any.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT HYDERABAD highlights the key issues of eligibility of Cenvat credit on MS items, the validity of the show cause notice invoking the extended period of limitation, and the absence of suppression of facts by the appellant. The decision ultimately favored the appellant, setting aside the demand and allowing the appeal based on the findings regarding the admissibility of credit and the time-barred nature of the notice.

← Previous Next →