2017 (9) TMI 773 - AT - Central Excise

CENVAT credit - structural items - Held that - the appellant could not produce any substantial evidence to support their claim that the goods were factually brought to their factory premises and used for manufacturing supporting structures of specified capital goods, their foundation. Consequently, the demand on account of ₹ 55,14,450/- along with interest and equivalent penalty confirmed by the impugned order is hereby sustained. However, in the case of the remaining amount of Cenvat credit of ₹ 25,20,652/-, when the assessee is claiming that they have used the items for which this Cenvat credit has been taken; in the light of Tribunal s decisions in the case of M/s Singhal Enterprises Pvt. Ltd. 2016 (9) TMI 682 - CESTAT NEW DELHI , this Cenvat credit amounting to ₹ 25,20,652/- is found admissible. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Appeal against Order-in-Original confirming demand of Cenvat credit; Admissibility of Cenvat credit on structural items; Suppression of material facts by the appellant; Applicability of extended period of limitation; Admissibility of Cenvat credit on steel items and Oxygen gas.

Analysis:

The case involved an appeal by M/s Agrawal Sponge Pvt. Ltd. against an Order-in-Original confirming the demand of Cenvat credit amounting to ?80,35,002/- along with interest and equivalent penalty. The issue revolved around the admissibility of Cenvat credit on structural items such as MS angles, channel, joints, and oxygen. The Department contended that the Cenvat credit on these items was not admissible. The appellant claimed that the goods were used for manufacturing supporting structures of specified capital goods. However, the Central Excise officers found discrepancies during their visit to the factory premises, leading to the reversal of a significant amount of Cenvat credit.

The adjudicating authority held that there was no evidence of the impugned goods being received in the factory premises, resulting in the confirmation of a portion of the demand. The appellant contested the non-receipt of goods, but failed to provide substantial evidence supporting their claim. The authority also concluded that the appellant suppressed material facts with the intent to evade duty payment, justifying the invocation of the extended period of limitation under Section 11A(1) of the Central Excise Act.

In the appeal, the appellant argued that the Cenvat credit on steel items and Oxygen gas was admissible based on precedents. The Tribunal considered the arguments and upheld the demand related to the disputed Cenvat credit amount of ?55,14,450/-, as the appellant could not substantiate the receipt and utilization of the goods. However, the Tribunal found the remaining Cenvat credit of ?25,20,652/- admissible based on precedents cited by the appellant, setting aside the demand imposed on this amount.

Ultimately, the impugned order was modified, partially allowing the appeal and confirming the demand for the disputed Cenvat credit while setting aside the demand for the remaining amount, in line with the Tribunal's findings and legal precedents cited by the appellant.

This detailed analysis highlights the key issues of admissibility of Cenvat credit, suppression of material facts, and the applicability of the extended period of limitation, culminating in the Tribunal's decision to partially allow the appeal based on the evidence and legal arguments presented by both sides.