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2018 (2) TMI 614 - AT - Central ExciseCENVAT credit - inputs/capital goods - Rail Systems, M.S. Racks, Testing Stands, cast crayon beams, battery sets, metal furniture (Tables), M.S. Beams and other fabrication items - Held that - battery sets, and cast cryston beams are used in or in relation to the manufacture of finished goods, hence eligible to credit. From the record, it is not clear whether the MS Angles, MS beams, channels etc. are used for the fabrication of the machineries or supporting structure of capital goods - to ascertain the use of MS Angles, MS Beams etc. in the factory, it is hereby remanded to the adjudicating authority to ascertain the fact and decide the same. Appeal allowed in part and part matter on remand.
Issues:
1. Eligibility of CENVAT credit on various items as capital goods. 2. Interpretation of the definition of "capital goods" under Rule 2(a)(A) of Cenvat Credit Rules, 2004. 3. Admissibility of credit on specific items like Rail Systems, M.S. Racks, Testing Stands, etc. 4. Applicability of judgments on disputed items. 5. Claim of demand being barred by limitation. 6. Need for evidence to establish the use of certain items in fabrication. Issue 1: Eligibility of CENVAT credit on various items as capital goods The Appellants availed CENVAT credit on items like Rail Systems, M.S. Racks, Testing Stands, etc., claiming them to be capital goods. The demand notice was issued for recovery of the credit availed, which was confirmed with interest and penalty. The Appellants contended that these items fall under the definition of "capital goods" or "inputs" used in the fabrication of capital goods. The Advocate cited several judgments supporting their claim on the disputed items. Issue 2: Interpretation of the definition of "capital goods" The Advocate argued that items like battery sets and cast cryston beams, used in the manufacturing process, are eligible for credit. However, the Revenue contended that no evidence was produced to establish the use of angles, channels, beams, etc., in the fabrication of machineries or supporting structures. The Tribunal noted the need to determine whether these items were used in the factory for the fabrication of capital goods. Issue 3: Admissibility of credit on specific items The Tribunal found that battery sets and cast cryston beams were indeed used in or in relation to the manufacture of finished goods, making them eligible for credit. However, clarity was required on the use of MS Angles, MS Beams, channels, etc., in the fabrication process. The matter was remanded to the adjudicating authority for further examination in light of relevant legal principles. Issue 4: Applicability of judgments on disputed items The Advocate relied on various judgments to support the Appellant's claim regarding the eligibility of specific items for credit. The Tribunal considered these judgments in the context of the items in question to determine their admissibility for credit. Issue 5: Claim of demand being barred by limitation The Appellant contended that the demand was barred by limitation, which was not explicitly addressed in the initial order. However, the Tribunal's decision focused on the substantive issue of eligibility for credit rather than the limitation aspect. Issue 6: Need for evidence to establish use in fabrication The Tribunal emphasized the importance of producing necessary evidence to establish the use of certain items like MS Angles, MS Beams, channels, etc., in the factory premises for the fabrication of capital goods. The Appellants were granted the opportunity to provide such evidence to support their claim. In conclusion, the Tribunal remanded the matter to the adjudicating authority for further examination regarding the eligibility of certain items for CENVAT credit based on the use in the fabrication process, as per relevant legal precedents cited during the proceedings.
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