2018 (2) TMI 378 - AT - Central Excise

CENVAT credit - AFBC boiler, which was assembled at the site of the appellants - case of the department is that appellants have taken ineligible Cenvat credit on items used in the fabrication of the boiler embedded to earth, which is not capital goods or inputs - Held that - issue decided in the case of M/s. Singhal Enterprises Private Limited Versus The Commissioner Customs & Central Excise, Raipur 2016 (9) TMI 682 - CESTAT NEW DELHI , where it was held that applying the User Test to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of Capital Goods as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit. Time Limitation - Held that - it is established that appellants had enquired from the department whether credit can be availed. The jurisdictional officer replied in the positive. The department thereafter cannot allege that appellants are guilty of suppression of facts - appeal succeeds on limitation also. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Eligibility of Cenvat credit on AFBC boiler parts and structural items assembled at the site. Limitation period for availing credit.

Eligibility of Cenvat Credit on AFBC Boiler Parts:
The dispute revolves around the eligibility of Cenvat credit on items used in the fabrication of an AFBC boiler assembled at the appellants' site. The department contends that the appellants claimed ineligible credit on items not defined as capital goods or inputs under the Cenvat Credit Rules, 2002 and 2004. The disputed credit amount is ?1,34,88,040 for the period Feb. '04 to Mar. '05. The Commissioner's order confirmed the demand, interest liability, and imposed a penalty. The core issue is whether the items used in assembling the boiler qualify for Cenvat credit.

Legal Precedents and Arguments:
During the hearing, the appellant's advocate cited several decisions supporting their case, including cases involving M/s. Monnet Ispat Ltd., M/s. Cether Vessels Pvt. Ltd., M/s. Singhal Enterprises Pvt. Ltd., and M/s. Mahalakshmi Glass Works Ltd. These cases addressed the classification of structural components used in boilers and supported the eligibility of Cenvat credit on such items. The appellant argued that the department's own communication acknowledged their eligibility for the credit, thus challenging the department's stance.

Analysis of Precedents:
The Tribunal referred to the decisions in the cases of M/s. Monnet Ispat Ltd. & M/s. Cether Vessels Pvt. Ltd., and M/s. Singhal Enterprises Pvt. Ltd., which upheld the eligibility of Cenvat credit on structural items used for supporting capital goods. These decisions emphasized the importance of the "user test" to determine whether goods qualify as capital goods. The case of M/s. Mahalakshmi Glass Works Ltd. also supported the appellants' position regarding credit on refractive materials. The Tribunal found that the decisions cited by the appellant aligned with their stand, ultimately supporting the appellants' eligibility for Cenvat credit on the boiler parts and structural items.

Conclusion on Eligibility and Limitation:
The Tribunal concluded that the appellants were entitled to Cenvat credit on the boiler parts and structural items used in assembling the boiler. Regarding the issue of limitation, it was established that the appellants had sought clarification from the department before availing the credit, and the jurisdictional officer had confirmed their eligibility. Therefore, the Tribunal held that the appeal succeeded on the limitation issue as well. Consequently, the appeal was allowed with consequential reliefs, if any.

This detailed analysis of the judgment highlights the key legal issues, arguments presented, relevant legal precedents, and the Tribunal's conclusions on the eligibility of Cenvat credit on AFBC boiler parts and the limitation period for availing such credit.