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2017 (2) TMI 1071 - AT - Central ExciseCENVAT credit - blast furnace - coke oven plant - whether these manufacturing facilities are to be considered as immovable property or as capital goods? - Held that - Both blast furnace and coke oven batteries are, without doubt, huge structures whose size is required to cater to the size of operation in a steel plant. The sheer size also indicates that these manufacturing facilities cannot be suspended in mid-air and will need to be adequately supported by means of civil foundation and other civil structures. Consequently, both these facilities get supported and embedded to the ground for the purposes of safety and smooth operational efficiency - the apex court in its various decisions has excluded only things of the type such as building or tree which get fixed to the earth - both blast furnace and coke oven batteries cannot be considered to be in the same category as building or tree - it emerges that both manufacturing facilities are to be considered as capital goods. The credit cannot be denied on the ground that duty paid documents are more than a year old. Since there is no time limit provided for taking CENVAT credit under CCR, the same cannot be denied on the ground of delay. The appellants are rightly entitled for capital goods credit on various structural steel items used for setting up the blast furnace as well as coke oven batteries - appeal allowed - decided in favor of appellants.
Issues Involved:
1. Eligibility of CENVAT credit on HR plates, sheets, MS beams, channels, and joists used for constructing blast furnace and coke oven plant. 2. Classification of blast furnace and coke oven plant as capital goods. 3. Timeliness of availing CENVAT credit. 4. Nature of blast furnace and coke oven plant as immovable property. Issue-wise Detailed Analysis: 1. Eligibility of CENVAT Credit: The appellant availed CENVAT credit on HR plates, sheets, MS beams, channels, and joists, which were partially manufactured in their own factory and partially procured from outside. These items were used for constructing a blast furnace and coke oven plant within the factory premises. The adjudicating authority disallowed the CENVAT credit amounting to ?3,03,61,027/- along with interest and imposed a penalty of ?50 lakhs. The Department disallowed the credit on grounds that the input invoices were not in the appellant's name and the credits were not availed immediately after receipt of goods. 2. Classification as Capital Goods: The appellant argued that the blast furnace and coke oven plants are classifiable under Chapter 8417 and 8479 of the Central Excise Tariff Act, 1985, respectively. They contended that these items are covered by the definition of "capital goods" as per Rule 2(a)(A) of the CENVAT Credit Rules, 2004. The appellant cited various case laws to support their claim that the structural steel items used in the manufacture of capital goods falling under Chapter 84 are eligible for CENVAT credit, even if the capital goods are fixed/embedded to earth. 3. Timeliness of Availing CENVAT Credit: The appellant took CENVAT credit after a delay of more than one and a half years. The Department argued that the credit should be disallowed due to the delay. However, the Tribunal noted that there was no time limit prescribed under the CENVAT Credit Rules, 2004 for taking credit. The Tribunal referenced the case of Balakrishna Industries Ltd. vs. CCE, Jaipur, which supports the view that credit cannot be denied on the ground of delay. 4. Nature as Immovable Property: The Department argued that the blast furnace and coke oven plant are huge structures constructed stage-by-stage at the site, involving substantial civil work, making them immovable property. Consequently, they cannot be considered capital goods. The Tribunal referred to the clarification issued by CBEC and the decision of the Hon’ble Supreme Court in Sirpur Paper Mills Ltd., which prescribed criteria for considering plant and machinery assembled at the site as excisable. The Tribunal concluded that the blast furnace and coke oven batteries are distinct from buildings or trees and are considered capital goods, even if they are embedded for operational efficiency and safety. Conclusion: The Tribunal held that the appellant is entitled to CENVAT credit on the structural steel items used for setting up the blast furnace and coke oven batteries. The impugned order denying such credit was found unsustainable and was set aside. The appeal was allowed, and the order was pronounced in Open Court on 13/02/2017.
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