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2018 (3) TMI 986 - AT - Central ExciseCENVAT credit - whether credit is admissible on the MS items etc. used for fabrication and erection of structural support of capital goods? - Held that - the jurisdictional High Court in the case of India Cements 2015 (3) TMI 661 - MADRAS HIGH COURT as well as in the case of thiru Arooran Sugars Ltd. 2017 (7) TMI 524 - MADRAS HIGH COURT has held that credit is admissible on MS items, HR sheets etc. used for fabrication of capital goods / structural supports of capital goods - credit allowed. Whether the credit is admissible on welding electrodes and tubes and pipes? - Held that - The very same issue was considered by the Hon ble Apex Court in Ramala Sahkari Chini Mills Ltd. Vs. Commissioner of Central Excise, Meerut 2010 (11) TMI 34 - SUPREME COURT OF INDIA , wherein the meaning of the word includes was analysed by the Hon ble Larger Bench of the Supreme Court and held that the said words used in the definition of inputs does not have restricted meaning. The amendment in the definition of inputs restricting the use of MS items for structural support of capital goods was inserted only on 7.7.2009 - the goods on which credit is availed was received in the factory prior to 7.7.2009. On the date of receipt of goods the restriction brought forth by the amendment dated 7.7.2009 was not in existence - credit allowed. Appeal allowed - decided in favor of appelalnt.
Issues Involved:
1. Eligibility of CENVAT credit on MS items used for fabrication of capital goods. 2. Imposition of penalty on disallowed credit. 3. Admissibility of credit on welding electrodes and tubes and pipes. 4. Interpretation of the definition of inputs in relation to MS items for structural support of capital goods. Issue 1: Eligibility of CENVAT credit on MS items used for fabrication of capital goods: The case involved the assessee availing CENVAT credit under the category of capital goods on items like TMT/CTD bars, HR Plates/sheets, MS channels, and MS angles, which were used in fabricating structures of capital goods. The department contended that credit was not eligible on such items. The original authority disallowed the credit on certain items but allowed it on others. The Commissioner directed the assessee to file a utilization certificate for verification by the Range Superintendent. The Tribunal held that MS items used for erection of support structures of capital goods are eligible for credit, as per the decisions of the Hon'ble High Court of Madras. However, the Tribunal found the delegation of verifying utilization to the Range Superintendent as not in conformity with the law, directing the Commissioner to verify and decide the admissibility of credit. Issue 2: Imposition of penalty on disallowed credit: The department filed an appeal against the imposition of a penalty on the disallowed credit, while the assessee challenged the penalty. The Tribunal noted that the assessee had reversed the credit immediately upon being pointed out, and considering the bona fide belief of the assessee, the penalty was deemed unwarranted. Citing a decision of the Hon'ble High Court of Madras, the Tribunal set aside the penalty imposed on the assessee. Issue 3: Admissibility of credit on welding electrodes and tubes and pipes: The Tribunal analyzed whether credit was admissible on welding electrodes and tubes and pipes. Referring to a decision of the Hon'ble Apex Court, it was held that the words used in the definition of inputs do not have a restricted meaning. The Tribunal found that the demand raised based on the decision in a specific case was unjustified, as subsequent decisions by the jurisdictional High Court supported the admissibility of credit on such items used for fabrication of capital goods or structural supports of capital goods. Issue 4: Interpretation of the definition of inputs in relation to MS items for structural support of capital goods: The Tribunal considered the period involved in the appeals and the applicability of an amendment to the definition of inputs. It was noted that the restriction on the use of MS items for structural support of capital goods was inserted after the relevant period in question. Relying on previous decisions by the Hon'ble High Court and the Supreme Court, the Tribunal concluded that the disallowance of credit was unjustified, setting aside the demands raised in the appeals. This detailed analysis of the judgment covers the various issues involved and the Tribunal's findings on each aspect, providing a comprehensive overview of the legal reasoning and decisions made in the case.
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