2018 (2) TMI 721 - AT - Central Excise

CENVAT credit - capital goods - plates, supporting structures and fabricated tanks etc., used by the appellant in their factory for manufacture of sugar and molasses - Held that - the denial of credit on the ground that proper intimation was not given under Rule 57(T) cannot be appreciated inasmuch as the same is only a procedural violation which substantive benefit should not be denied. CENVAT credit to the extent of ₹ 1,59,900/- stands disallowed for non production of proper documents - matter remanded to the lower authorities with directions to the appellant to produce the documents in support of their claim. Appeal allowed in part and part matter on remand.

Summary

Issues:
- Denial of Cenvat Credit for certain items used in the factory for manufacturing sugar and molasses.
- Interpretation of Rule 57(T) of erstwhile Central Excise Rules, 1944 regarding declaration filing.
- Disallowance of credit due to non-production of proper documents.
- Imposition of penalty.

Analysis:

1. The judgment addresses the denial of Cenvat Credit for items like plates, supporting structures, and fabricated tanks used in the factory for manufacturing sugar and molasses. The Commissioner (Appeals) disallowed the credit based on the grounds that these items were used as supporting structures and did not qualify as cenvatable capital goods. Additionally, it was noted that a proper declaration was not filed as required by Rule 57(T) of the Central Excise Rules, 1944.

2. The Tribunal considered various decisions of higher courts, including the Hon'ble Gujarat High Court decision in the case of Mundra Ports & Special Economic Zone Ltd. v. Commissioner of Central Excise & Customs, which disagreed with a Tribunal decision in a similar case. Based on these precedents, the Tribunal found that the appellant's claim for Cenvat Credit on plates, tanks, and supporting structures was valid and appropriate, overturning the Commissioner's decision.

3. Regarding the interpretation of Rule 57(T) of the Central Excise Rules, the Tribunal stated that the denial of credit due to a procedural violation, such as the failure to provide proper intimation, should not lead to the substantive benefit being denied. Therefore, the Tribunal held that the appellant was entitled to the credit for the items in question, emphasizing that procedural lapses should not result in the denial of substantive benefits.

4. The judgment also addressed the disallowance of credit amounting to ?1,59,900 due to the non-production of proper documents. The Tribunal decided to remand this specific issue to the lower authorities with directions for the appellant to produce the necessary documents to support their claim. This decision highlights the importance of maintaining proper documentation to substantiate claims for Cenvat Credit.

5. Finally, the judgment dealt with the imposition of a penalty. Since the appeal was partly allowed and partly remanded, the Tribunal found no justification for imposing a penalty and therefore set aside any penalties that were previously imposed. The appeal was disposed of accordingly, ensuring fairness in the decision-making process.