2017 (5) TMI 696 - AT - Central Excise

CENVAT credit - MS plates, electrical plates, MS channels, MS angles, MS beams, joists, beams, heat rails - Held that - Once it is admitted that these items are used as components for making platforms and ladders which were operational components of 230 TDP Rotary Kiln, there is no reason to disallow the credit on these items - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of CENVAT credit on certain items wrongly availed by the appellant.
2. Interpretation of the definition of capital goods.
3. Applicability of penalty under Rule 15(2) of Cenvat Credit Rules, 2004.
4. Time limitation for raising the demand.

Analysis:
1. The appellant, engaged in paper and paperboard manufacturing, availed CENVAT credit on various items falling under different chapters of the Central Excise Tariff Act, 1985, which were deemed as capital goods by the appellant. The Department contended that these items did not qualify as capital goods, leading to a show cause notice for recovery of wrongly availed credit. The Commissioner (A) partially allowed the appeal, permitting credit on certain items. The appellant argued that the impugned order misconstrued the definition of capital goods and relied on judicial precedents to support their claim that the items were essential components of machinery, entitling them to credit under the category of inputs.

2. The learned counsel for the appellant emphasized that the items in question, such as MS plates, beams, angles, and electrical plates, were integral components of machinery like rotary kilns and chlorine dioxide plants, without which the main machinery could not function. Citing various case laws, the appellant argued that these items constituted support structures necessary for the operation of machinery, making them eligible for CENVAT credit. The Tribunal agreed with the appellant's contention, noting that the items were used in making platforms and ladders, essential operational components of specific machinery falling under relevant chapters of the Central Excise Tariff Act. Relying on the precedent set by the case of Commissioner of Customs and Central Excise vs. Prakash Industries Ltd., the Tribunal allowed the appeal, granting the appellant CENVAT credit on the disputed items.

3. The lower adjudicating authority imposed penalties under Rule 15(2) of the Cenvat Credit Rules, 2004, along with confiscation and redemption fines. However, the Commissioner (A) set aside the penalties and fines, which were challenged in the present appeal. The Tribunal did not specifically address the penalty issue in the summarized judgment, as the focus was primarily on the eligibility of CENVAT credit for the appellant.

4. The appellant contended that the demand raised by the Department was time-barred, as the show cause notice was issued beyond the statutory period without any suppression of facts. Arguing that the extended period could not be invoked, the appellant claimed that the entire demand was barred by limitation. However, the Tribunal did not provide a detailed analysis of the time limitation aspect in the summarized judgment, focusing more on the eligibility of CENVAT credit on the disputed items.