2017 (5) TMI 451 - AT - Central Excise

CENVAT credit - MS plates, angles, channels etc., - MS items are structural supports for capital goods like pipelines etc. - Held that - The appellant had furnished Chartered Engineer s Certificate as well as photographs regarding the use of the items for fabrication of such structural supports of capital goods - the credit was denied merely relying in the decision of the case of Vandana Global Ltd., 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) , where the view was taken that when the supporting structures are fixed to the earth, they become immovable property and therefore are not eligible for credit, which is not correct - the disallowance of credit is unjustified. Time limitation - Held that - appellants have disclosed the details of credit availed in the ER-1 returns. There is no evidence for suppression of facts. The demand therefore is time barred. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of CENVAT credit on MS items used for fabrication of structural supports for capital goods.
- Denial of credit by department based on the immovability of the supporting structures.
- Contest on merits and limitation grounds.
- Disclosure of credit availed in ER-1 returns.
- Suppression of facts and time-barred demand.

Analysis:

The judgment by the Appellate Tribunal CESTAT HYDERABAD involved appeals concerning the availment of CENVAT credit on MS items used for fabricating structural supports for capital goods. The appellants, engaged in manufacturing bulk drugs, were initially issued a show cause notice for irregularly availing credit on specific items categorized as capital goods. The original authority confirmed the demand and interest but did not impose any penalty. Subsequently, the department appealed against the non-imposition of penalty, leading to separate Orders-in-Appeal by the Commissioner (Appeals) favoring the department and upholding the demand, interest, and imposing a penalty, which prompted the appeals before the Tribunal.

During the proceedings, the appellant argued that the MS items were essential for supporting pipelines and machinery, emphasizing their necessity for positioning and operation. They provided a Chartered Engineer's Certificate and photographs to validate the use of these items for fabricating structural supports of capital goods. The department, however, contended that when MS items were used for structural supports embedded in the earth, they transformed into immovable property, justifying the denial of credit due to lack of evidence establishing their use for capital goods.

The Tribunal deliberated on whether MS items utilized for fabricating structural supports for capital goods were eligible for credit, particularly for the period before 07.07.2009. It was noted that the appellant had substantiated their claim with a Chartered Engineer's certificate during the appeal process. Relying on precedents cited by the appellant, the Tribunal concluded that the denial of credit based solely on the immovability argument was unjustified. Additionally, since the appellants had disclosed the credit availed in their ER-1 returns, the Tribunal deemed the demand as time-barred due to the absence of evidence indicating suppression of facts. Consequently, the impugned order disallowing the credit was set aside, and the appeals were allowed with any consequential reliefs.