2017 (6) TMI 798 - AT - Central Excise

CENVAT credit - steel items such as MS plates, angles, bars and rods, rounds, sheets, flats etc. - denial on the ground that these steel items are neither inputs nor capital goods - Held that - appellants have only claimed CENVAT credit of 35% on the total quantity of steel purchased which has been used in the manufacture of capital goods - the appellants have rightly availed the CENVAT credit on 35% of the steel which was used in the manufacture of capital goods. Extended period of limitation - Held that - the entire demand is time barred as the department has not been able to bring in any evidence on record to show any intention on the part of the appellant to evade payment of duty. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against the Commissioner's order disallowing CENVAT credit
- Classification of steel items for CENVAT credit
- Application of extended period of limitation

Analysis:
1. Appeal against Commissioner's Order:
The appellant filed an appeal against the Commissioner's order rejecting their appeal but modifying the demand of CENVAT credit from ?16,32,578 to ?5,71,401. The appellant argued that the impugned order was unsustainable as it did not consider the evidence on record and was contrary to binding judicial precedents. They contended that they had only availed credit on steel used in the manufacture of capital goods, not on steel used in building structures. The appellant also challenged the invocation of the extended period of limitation.

2. Classification of Steel Items for CENVAT Credit:
The audit revealed that the appellants had availed CENVAT credit on various steel items, apportioning 65% for building structures and 35% for capital goods. However, the authorities found this credit irregular as it did not fit the definitions of capital goods or inputs under the CENVAT Credit Rules. The appellant provided a Central Excise certificate to support their claim of availing credit on steel used in capital goods production. The Tribunal noted that the Commissioner had not considered this evidence and rejected the credit claim based on lack of substantiation. The Tribunal, after reviewing the material on record, found that the appellants had validly availed CENVAT credit on 35% of the steel used in manufacturing capital goods.

3. Application of Extended Period of Limitation:
The appellant argued that the entire demand was time-barred as there was no suppression or fraud on their part, citing various legal precedents to support their claim. The Tribunal agreed with the appellant, stating that the findings of suppression by the authorities were not based on evidence but mere assumptions. As the department failed to provide evidence of intentional duty evasion, the Tribunal concluded that the demand was indeed time-barred. Consequently, the Tribunal set aside the Commissioner's order and allowed the appeal of the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, allowing their appeal against the Commissioner's order disallowing CENVAT credit. The judgment emphasized the proper classification of steel items for credit purposes and the application of the extended period of limitation, ultimately determining that the appellant had validly availed the credit and that the demand was time-barred.