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2018 (3) TMI 1481 - AT - Central ExciseCENVAT credit - whether appellant are eligible for CENVAT Credit in respect of MS angles, channels, beam, HR coils etc. which according to them except for use of a very small quantity in fabrication of supporting structure have been used for fabrication of capital goods? - Held that - Hon ble Gujarat High Court s decision in the case of Mundra Ports & Special Economic Zone Ltd. v. CCE & Cus 2015 (5) TMI 663 - GUJARAT HIGH COURT was applicable to appellant, where it was held that The definition of Rule 2(k) was applicable and Explanation 2 did not provide that cement and steel would not be eligible for input credit. The appellant is neither having any factory nor he is manufacturer. The appellant is a service provider of port. Remaining quantity was used for fabrication of capital goods - reliance placed in the case of Union of India v. Associated Cement Co. Ltd, 2010 (10) TMI 1142 - CHHATTISGARH HIGH COURT , wherein it has been held that Cenvat Credit was admissible as inputs on MS plates, channels, angles etc., if they are used in the manufacture or fabrication of capital goods which are used within the factory for manufacture of final product. Credit allowed - appeal allowed - decided in favor of appellant.
Issues:
1. Eligibility for Cenvat Credit on steel items used for fabrication of capital goods. 2. Applicability of case laws regarding Cenvat Credit on steel items. Analysis: 1. The dispute in this case revolves around the eligibility of the appellant, a sugar mill, for Cenvat Credit on steel items like MS angles, channels, beam, and HR coils. The appellant claimed that these items were primarily used for the fabrication of capital goods, with only a small quantity utilized for supporting structures. However, the revenue authority contended that the appellant was not entitled to Cenvat Credit on these items, leading to a show cause notice for recovery of &8377; 22,92,954. The Order-in-Original confirmed the demand and imposed a penalty, prompting the appellant to appeal to the Commissioner(Appeals), who partially allowed the appeal by reducing the demand to &8377; 21,44,294 and ordering the payment of interest while dispensing with the penalty. Dissatisfied with this decision, the appellant approached the Tribunal for further relief. 2. During the hearing, the appellant's counsel argued that the steel items, amounting to &8377; 4.5 lakhs, were predominantly used for the fabrication of capital goods essential for the final product's manufacturing process. The counsel relied on the decision of the Hon'ble Gujarat High Court in the case of Mundra Ports & Special Economic Zone Ltd. v. CCE & Cus, emphasizing that the period in question was prior to June 2006. Additionally, the counsel cited the ruling of the High Court of Chattisgarh in the case of Union of India v. Associated Cement Co. Ltd, which supported the admissibility of Cenvat Credit on steel items like MS plates, channels, and angles if used in the production or fabrication of capital goods within the factory for the final product's manufacturing process. 3. On the other hand, the Revenue, represented by the Id. AR, supported the impugned order that disallowed the Cenvat Credit on the steel items in question. 4. After considering the arguments presented by both sides and examining the relevant case laws, the Tribunal found merit in the appellant's contentions. Consequently, the Tribunal set aside the order-in-appeal and allowed the appeal in favor of the appellant. The operative part of the order was pronounced in the open court.
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