2018 (2) TMI 786 - AT - Central Excise

CENVAT credit - certain items falling under Chapters 72 and 73 of the Tariff - manufacturer of sugar, molasses etc. - Held that - the items in question have been used in fabrication of plant and machinery and as such they are eligible for input credit as defined in Rule 2(k) read with Rule 2(a)(A) of CCR 2004 - similar view was taken by the Hon ble Madras High Court in Dalmia Cements Bharat Ltd vs. CCE, Chennai 2015 (8) TMI 1336 - MADRAS HIGH COURT , where it was held that The benefit of Rule 57Q is available, on the duty paid on the capital goods used by the manufacturer in his factory and for utilising the credit so allowed towards payment of duty of excise leviable on the final products. The appellant shall be entitled to take back the Cenvat Credit they have reversed earlier - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to disallowance of Cenvat Credit on certain items under Chapters 72 and 73 of the Tariff, invocation of extended period of limitation, eligibility of items used in fabrication of plant and machinery for input credit.

Analysis:

1. Challenge to Disallowance of Cenvat Credit:
The appellant, a manufacturer of sugar and molasses, contested the disallowance of Cenvat Credit on specific items under Chapters 72 and 73 of the Tariff. The show cause notice alleged that the items did not qualify as 'capital goods' or 'components, spares, and accessories' as per CCR, 2004. The items were used in fabrication, repair, and maintenance of plant equipment for the distillery, which was not subject to Central Excise Duty. The impugned order upheld the disallowance amounting to a significant sum.

2. Invocation of Extended Period of Limitation:
The extended period of limitation was invoked based on the allegation of willful suppression of facts regarding the use of certain items in the manufacturing process. The Commissioner relied on a Supreme Court ruling to support the invocation of the extended period. The appellant argued against the validity of this invocation, citing proper record maintenance and timely filing of returns.

3. Eligibility of Items for Input Credit:
The Tribunal analyzed the eligibility of the items in question for input credit under Rule 2(k) read with Rule 2(a)(A) of CCR 2004. It was established that the items were used in the fabrication of plant and machinery, qualifying them as eligible for input credit. The Tribunal referenced similar views taken by the Madras High Court and previous Tribunal decisions to support their finding.

4. Decision and Precedents:
After considering the arguments, the Tribunal allowed the appeal, granting the appellant consequential benefits. The appellant was entitled to reclaim the Cenvat Credit reversed earlier or seek a refund as per the law. The decision was supported by precedents from the Madras High Court and previous Tribunal rulings. The Miscellaneous Application for early hearing was also disposed of.

In conclusion, the judgment favored the appellant, recognizing the eligibility of the items in question for input credit and overturning the disallowance of Cenvat Credit. The invocation of the extended period of limitation was deemed invalid, and the appellant was granted relief with consequential benefits.