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2018 (3) TMI 163 - AT - Central ExciseCENVAT credit - inputs - M.S. Plates, M.S. Rounds, M.S. Angles used as Parts/Components for the capital goods in manufacture of ultimate product - Held that - it is settled position of law that the components, spares, and accessories need not fall in Chapter-82, 84 and Chapter 85 of CETA. They can fall in any chapter. The only condition is that they should be part, component or accessory of machinery specified in clause (i)-MF (DR) circular No.276/110/96-TRU dated 02.12.1996 - the appellant are held, allowed to avail the credit of ₹ 69,09,550/- on the inputs and as such there is no contravention of Rule 3 of the Cenvat credit Rules, 2004 and no duty or credit is recoverable under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A(1) of the Central Excise Act, 1944. Interest - penalty - Held that - no interest at appropriate rate is recoverable under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944 - the Appellant are not liable for penalty under Rule 15 of Cenvat Credit Rules, 2004 for contravention of Rule 3 of Cenvat Credit Rules, 2004. Appeal allowed - decided in favor of appellant.
Issues:
Denial of credit availed for goods used as 'Parts/Components for the capital goods' in the manufacture of the ultimate product. Analysis: The appellant filed an appeal against the Commissioner's order denying credit for goods like M.S. Plates, M.S. Rounds, M.S. Angles used as parts/components for capital goods. The appellant, engaged in manufacturing Billets, MS Round Bar, and M.S. Roll bar, availed Cenvat credit on various goods under Cenvat Credit Rules, 2004. Revenue contended that the goods claimed as components of capital goods were not covered under the definition of capital goods, leading to inadmissible credit amounting to a specific sum recoverable under Cenvat Credit Rules, 2004 and Central Excise Act, 1944. The appellant argued that the goods on which credit was taken were essential for the manufacturing activity, satisfying the 'user test' as per legal precedents. They cited judgments like CCE-Coimbatore v. Jawahar Mills Ltd. to support their position. The Tribunal found merit in the appellant's submission, emphasizing that parts, components, and accessories need not fall under specific chapters to be eligible for credit, as long as they are part of machinery specified in relevant circulars. Regarding the applicability of specific judgments, the Tribunal noted that the ruling in Vandana Global Ltd. v. CCE Raipur was no longer valid law, as clarified by subsequent judgments like Surya Alloys Industries Ltd. v. Union of India. The Tribunal also addressed the issue of Notification 16/2009-CE(NT), stating its prospective application and its inapplicability to the case period. Consequently, the Tribunal allowed the appellant to avail the credit on inputs without contravening Cenvat Credit Rules, 2004, and ruled out any duty, interest, or penalty recoverable from the appellant. In conclusion, the Tribunal allowed the appeal, granting relief to the appellant based on the legal interpretations, precedents, and arguments presented during the proceedings. The judgment highlighted the importance of the 'user test' in determining the eligibility of goods for credit and clarified the applicability of relevant laws and notifications in the given context.
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