2018 (1) TMI 620 - AT - Central Excise

CENVAT credit - various iron & Steel items namely M. S. Channel, M. S. Angle, H.R. Plates etc - Held that - The Tribunal allowed the credit on the said items in the cases Commissioner of Central Excise, Raipur Versus M/s Jindal Steels And Power Ltd. 2016 (1) TMI 59 - CESTAT NEW DELHI and M/s. Singhal Enterprises Private Limited Versus The Commissioner Customs & Central Excise, Raipur 2016 (9) TMI 682 - CESTAT NEW DELHI - appeal dismissed - decided against Revenue.

Summary

Issues: Alleged wrongful availing of CENVAT Credit on iron & steel items, interpretation of items as spare parts or support structures, applicability of quasi-judicial/judicial positions, relevance of Chartered Engineer's Certificate, comparison with precedent cases, validity of Larger Bench decision.

Analysis:
1. Alleged wrongful availing of CENVAT Credit: The case involved M/s Singhal Enterprise (P) Ltd facing five Show Cause Notices for allegedly wrongly availing CENVAT Credit on iron & steel items during a specific period. The Adjudicating Authority confirmed the demand, interest, and penalty under Rule 15 of Cenvat Credit Rules, 2004. The Commissioner (Appeals) set aside the order to a certain extent, leading to the Revenue filing an appeal.

2. Interpretation of items as spare parts or support structures: The crux of the matter revolved around whether the disputed iron & steel items were to be considered as spare parts, components, or accessories crucial for the functioning of capital goods or merely support structures. The Appellant argued that the items were essential for the erection of machinery and equipment necessary for the manufacture of Sponge Iron.

3. Applicability of quasi-judicial/judicial positions: The Tribunal analyzed various quasi-judicial and judicial positions to determine the essentiality of the disputed items. It emphasized the need for a detailed examination to establish whether the items were indispensable for the functioning of capital goods or merely served as support structures. The Tribunal found the Adjudicating Authority's reasoning insufficient and not properly distinguishing the crucial facts of the case.

4. Relevance of Chartered Engineer's Certificate: The Revenue contended that the disputed goods were consumed in different sections of the manufacturing premises for the structures of machineries, as per the Chartered Engineer's Certificate. However, the Respondent argued that the items were used for both the manufacture of capital goods and support structures, referencing precedents where similar credits were allowed.

5. Comparison with precedent cases: The Tribunal considered several precedent cases where similar credits on disputed items were allowed, citing instances involving Jindal Steel & Power Ltd., SPS Steel & Power Ltd., and others. The Respondent highlighted these cases to support their argument that the disputed items should be treated similarly.

6. Validity of Larger Bench decision: The Ld. A.R. referred to a decision of the Larger Bench of the Tribunal in Vandana Global Ltd., which was contested by the Respondent citing decisions from various Hon’ble High Courts holding that the Larger Bench decision was not a good law. Ultimately, the Tribunal found no reason to interfere with the Commissioner (Appeals) order, leading to the rejection of the Revenue's appeal.

This detailed analysis encapsulates the key aspects of the legal judgment, including the issues raised, arguments presented, and the Tribunal's decision based on the interpretation of relevant legal provisions and precedents.