2017 (9) TMI 448 - AT - Central Excise

CENVAT credit - capital goods - bars which were used in making pollution control equipments - gone into making of civil foundation - case of appellant is that part of the bars were used for making pollution control equipments and pollution control equipments were qualified to be treated as capital goods, and CENVAT credit is admissible - Held that - the contention of the appellant is sustainable which relates to that part of the said bars which were used in making pollution control equipments as admissible for availment of Cenvat credit. In so far as the part of the bars which gone into making of civil foundation, the said issued is covered by the ruling of Hon ble High Court of Madras in the case of Commissioner of Central Excise, Tiruchirapalli Versus India Cements Ltd 2011 (8) TMI 399 - MADRAS HIGH COURT , where it was held that these items are not used for civil construction, but for the construction, which are absolutely necessary for establishing a manufacturing unit for cement - Cenvat credit on that part of the HSD Bars, TMT Bars & MS Bars is also admissible which have gone into making of civil foundation to erect capital goods in the present case. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Admissibility of Cenvat credit for bars used in pollution control equipment and civil foundation for capital goods.

Analysis:
The appeal involved a dispute regarding the admissibility of Cenvat credit by M/s J.B. Daruka Paper Ltd. for bars used in pollution control equipment and civil foundation for capital goods. The Central Excise Officers found discrepancies in the Cenvat credit claimed by the appellant and issued a Show Cause Notice proposing to disallow the credit. The appellant contended that part of the bars were used for pollution control equipment and civil foundation, which should qualify for Cenvat credit. The Commissioner (Appeals) relied on a precedent and rejected the appeal but reduced the penalty. The appellant then approached the Tribunal challenging the decision.

During the proceedings, the appellant's counsel argued that the bars used for pollution control equipment and civil foundation should be eligible for Cenvat credit. The counsel cited a ruling by the Hon'ble High Court of Madras to support the claim that certain bars used for civil construction necessary for establishing a manufacturing unit should be admissible for credit. The counsel also highlighted a Tribunal's decision where a judge who previously ruled on a similar case was part of the bench, emphasizing the applicability of the user test for determining capital goods.

On the other hand, the Revenue's representative relied on a ruling by the Hon'ble High Court of Allahabad, contending that the items in question were used solely for civil structures and could not be classified as capital goods. However, after considering the arguments and examining the facts, the Tribunal found merit in the appellant's contention. The Tribunal referenced the Madras High Court ruling, which supported the admissibility of Cenvat credit for bars used in civil construction necessary for establishing a manufacturing unit. Consequently, the Tribunal allowed the appeal, setting aside the previous orders and granting the appellant consequential relief as per the law.

In conclusion, the Tribunal upheld the admissibility of Cenvat credit for bars used in pollution control equipment and civil foundation for capital goods, based on the legal principles established by the Madras High Court ruling. The decision favored the appellant, overturning the earlier orders and entitling them to appropriate relief in accordance with the law.