2018 (1) TMI 633 - AT - Central Excise

CENVAT credit - MS Angles, Channels etc. - The department was of the view that the appellants are not eligible for credit taken on cement and steel as they do not fall under the definition of inputs or capital goods - Held that - The decision in the case of Rajasthan Spinning and weaving mills 2010 (7) TMI 12 - SUPREME COURT OF INDIA , had held that the credit is eligible - the imposition of penalty is unwarranted and unjustified and is set aside. Appeals for remanded reconsideration by following various case laws on the said issue whether credit is admissible on cement and steel used for construction of building/foundation/shed etc. - appeal allowed in part and part matter on remand.

Summary

Issues:
1. Eligibility of Cenvat credit on cement and steel used in construction.
2. Applicability of case laws on the issue.
3. Imposition of penalty and its justification.

Analysis:

Issue 1: Eligibility of Cenvat credit on cement and steel used in construction
The appellants, cement manufacturers availing Cenvat credit, faced a dispute regarding the eligibility of credit on cement and steel used in constructing a new plant. The department contended that such materials did not qualify as inputs or capital goods. The Tribunal noted the previous remand of similar appeals and decided to remand the present case for reconsideration. The Tribunal directed the adjudicating authority to consider various case laws, including those cited by the appellants, to determine the admissibility of credit on cement and steel used in construction.

Issue 2: Applicability of case laws on the issue
The Tribunal acknowledged the reliance on previous decisions, including CCE, Mysore Vs. ICL Sugars Ltd., CCE, Trichy Vs. India Cements Ltd., and others, to support the appellants' claim for Cenvat credit on cement and steel. The Tribunal granted the request for remand, emphasizing the need to consider the cited case laws and any other relevant precedents in reaching a decision. The Tribunal highlighted the changing definition of inputs and the conflicting interpretations regarding the admissibility of credit on steel items, ultimately setting aside the penalty imposed.

Issue 3: Imposition of penalty and its justification
Regarding the penalty imposed, the Tribunal found it unwarranted and unjustified in light of the contentious nature of the issue during the relevant period. The Tribunal noted conflicting decisions and the evolution of the definition of inputs, emphasizing the per incuriam status of the view that credit on steel items was inadmissible. Citing precedents like the case of Rajasthan Spinning and weaving mills and India Cements Ltd., the Tribunal concluded that the penalty should be set aside. Consequently, the appeals were partly remanded, and the penalty imposed was overturned.

In conclusion, the Tribunal's judgment addressed the eligibility of Cenvat credit on cement and steel used in construction, considered relevant case laws, and justified the decision to set aside the penalty based on evolving interpretations and precedents in the field.