2017 (9) TMI 1424 - AT - Central Excise

CENVAT credit - capital goods which were used in the mining area - SCN were issued alleging that tyres for dumpers and dumpers do not qualify to be capital goods - Held that - issue involved in this case was initially decided by the Division Bench of the Hon ble Supreme Court in the case of Vikram Cements vs. Commissioner of Central Excise, Indore 2006 (2) TMI 1 - Supreme court , where it was held that Modvat/Cenvat credit on capital goods used in such mines will not be available to the concerned assessee under the appropriate Modvat/Cenvat Rules - the matter is remanded to the Adjudicating Authority to decide in the light of the above decision - appeal allowed by way of remand.

Summary

Issues: Disallowance of Cenvat Credit, Confiscation and Penalty on Capital Goods, Interpretation of Capital Goods Definition

In this case, the Adjudicating Authority disallowed Cenvat Credit, imposed interest, confiscated, and levied redemption fine and penalty on capital goods used in mining operations. The Commissioner(Appeals) set aside the adjudication order and allowed the appeal filed by the respondent, leading the Revenue to appeal. The key issue revolved around the classification of dumpers and their tires as capital goods under the Cenvat Credit Rules, 2002. The appellant, engaged in mining and manufacturing activities, used dumpers and tires in their operations. The Show Cause Notices alleged that these items did not qualify as capital goods, as they were not covered under the specified chapter heading of the Central Excise Tariff Act, 1985. The Tribunal directed the Revenue to verify iron ore supply to different buyers by the respondent from their mines.

The case involved a reference to the decision of the Hon’ble Supreme Court in the matter of South Eastern Coalfields Ltd. v. Commissioner of Customs & Central Excise, Madhya Pradesh. The Revenue contested the Commissioner(Appeals) order based on this decision. The legal arguments presented by the appellant referred to various case laws, which were deemed irrelevant. The issue was further analyzed in light of the Larger Bench and Division Bench judgments of the Supreme Court in the cases of Vikram Cements and Vikram Cement, respectively. These judgments clarified the availability of Modvat/Cenvat credit on capital goods based on whether the mines were captive or supplied to other entities. The matter was remanded to the Adjudicating Authority to re-decide considering the Supreme Court's decision. Consequently, the appeal by the Revenue was allowed for a fresh decision in alignment with the Supreme Court's ruling. The judgment emphasized granting a reasonable opportunity of hearing to the appellant during the re-adjudication process.