2017 (5) TMI 35 - AT - Central Excise

CENVAT credit - capital goods acquired on lease basis for another part of the respondent s factory - denial on the ground that M/s IISIPL is not a Finance Company but is engaged in industrial operation. Rule 4(3) of the Cenvat Credit Rules allows Cenvat credit of capital goods if such capital goods are acquired or leased from a Finance Company - Held that - At the time of receipt of the relevant goods, M/s. IISIPL was the buyer of these capital goods. However, the goods were consigned to the respondent where they were erected. It is also not disputed that these goods have also been used by the respondent in the manufacture and clearance of dutiable goods. Further, IISIPL have since been merged with the respondent in terms of orders of the Hon ble High Court of the Bombay w.e.f. 31.03.2008 - a similar issue had come up before the Tribunal in the respondent s own case in respect of capital goods acquired on lease basis for another part of the respondent s factory. He relied upon the case of Jayaswal Neco Industries Ltd. Vs. CCE, Raipur 2016 (3) TMI 127 - CESTAT NEW DELHI , where it was held that Rule 4(3) only further enlarges scope by stating that the credit would not be disallowed even if capital goods are cleared from the financing company. It does not mean that the capital goods must be acquired from a financing company and any other acquisition of capital goods from the company who is not a financing company will disentitle the availment of credit. - credit allowed. CENVAT credit - various steel items used in the manufacture of immovable supporting structures for capital goods - Held that - The dispute on the admissibility of Cenvat credit on steel items used for fabrication of supporting structures for capital goods has been settled by the Tribunal in the case of Singhal Enterprises Pvt. Limited V. CCE 2016 (9) TMI 682 - CESTAT NEW DELHI , where it was held that applying the User Test to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of Capital Goods as contemplated under Rule 2(a) of the Cenvat Credit Rules - credit allowed. Appeal rejected - decided against Revenue.

Summary

Issues:
1. Disallowance of Cenvat credit availed by the respondent.
2. Interpretation of Rule 4(3) of the Cenvat Credit Rules regarding ownership of goods.
3. Admissibility of Cenvat credit on steel items used for fabrication of supporting structures for capital goods.

Analysis:
1. The appeal concerned the disallowance of Cenvat credit amounting to ?28 crores availed by the respondent during a specific period. The Revenue contended that the goods were purchased by another entity engaged in industrial operations and used in manufacturing activities by them. However, the Commissioner held that since the goods were consigned to the respondent and used within their factory premises, they were entitled to the credit. The Commissioner emphasized that ownership was not a determining factor for credit admissibility. The Tribunal found that the goods were indeed used by the respondent in manufacturing dutiable goods and that the entities had merged, justifying the credit availed.

2. The dispute also revolved around the interpretation of Rule 4(3) of the Cenvat Credit Rules, which allows credit for capital goods acquired from a finance company. The Revenue argued that since the goods were not acquired from a finance company, the credit should be disallowed. However, the Tribunal referenced a previous case and held that the rule did not mandate acquisition only from finance companies, emphasizing the legislative intent to allow credit for capital goods irrespective of the seller being a finance company. The Tribunal dismissed the Revenue's challenge based on this ground.

3. Additionally, the Revenue challenged the allowance of Cenvat credit amounting to about ?3 crores on steel items used for fabricating supporting structures for capital goods. The Tribunal referred to several precedents where similar disputes were settled in favor of allowing the credit. By following these decisions, the Tribunal concluded that the Cenvat credit on steel items should be permissible for the respondent. Consequently, the Tribunal upheld the impugned order and rejected the Revenue's appeal based on the findings and precedents cited.

In conclusion, the Tribunal affirmed the decision of the Commissioner, allowing the Cenvat credit availed by the respondent and rejecting the Revenue's appeal on all grounds. The judgment provided a detailed analysis of the issues surrounding the admissibility of Cenvat credit and the interpretation of relevant rules, citing precedents to support the decision.