2018 (6) TMI 433 - AT - Central Excise

CENVAT credit - inputs/capital goods - H.R. Plates, H.R. Sheets, M.S. Channels, M.S. Joists etc. used as structural items in their factory - period involved is prior to 07.07.2009 - Credit on MS items used for structural supports has been denied alleging that after fabrication and fixing to the earth, these become immovable property - Held that - In the case of the Mundra Ports & Special Economic Zone Ltd. Vs CCE & Cus. 2015 (5) TMI 663 - GUJARAT HIGH COURT , it has been observed that the Tribunal has not explained in the decision of Vandana Global 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) as to what is the aid used for considering that the amendment brought forth has retrospective application, and the denial of credit - the disallowance of credit is unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Dispute over eligibility for cenvat credit on certain items used as structural supports in the factory before a specific amendment date.

Analysis:

1. Issue of Eligibility for Cenvat Credit:
The case involved a dispute regarding the eligibility of the assessee to claim cenvat credit on items like MS Angles, HR Sheets, etc., used as structural supports for machinery in their factory. The department contended that these items did not qualify as "capital goods" or "inputs" under the Cenvat Credit Rules, 2004, specifically falling under Chapter 72. Show cause notices were issued proposing disallowance of credit, recovery with interest, and penalties. The original authority confirmed the demand and penalties, which was partially upheld by the Commissioner (Appeals). The assessee challenged the demand and interest, while the Department appealed against the penalty decision.

2. Arguments of the Assessee:
The assessee's counsel argued that the structural supports made from the disputed items were essential for maintaining machinery like distillation and evaporator in a standing condition. These supports were crucial for the machinery's stability, especially considering their height and design. The denial of credit was based on a retrospective amendment to the definition of "inputs," which the assessee contended did not apply to the period in question. Reference was made to a jurisdictional High Court decision supporting the eligibility of such items for credit.

3. Department's Position:
The Department, represented by Shri K.P. Muralidharan, maintained the findings of the impugned order, supporting the denial of credit based on the retrospective application of the amendment and the classification of the fixed supports as immovable property.

4. Judgment and Decision:
After considering the arguments from both sides, the Tribunal noted that the disputed period predated the relevant amendment date. Citing precedents and a recent decision from the jurisdictional High Court, the Tribunal found that the denial of credit on items used for structural supports was unjustified. The order disallowing the credit was set aside, allowing the assessee's appeal with consequential benefits, if any, as per law. Consequently, the Department's appeal was dismissed.

In conclusion, the Tribunal ruled in favor of the assessee, allowing the cenvat credit on the disputed items used as structural supports in the factory, emphasizing the retrospective application of the amendment and relevant legal precedents in support of the decision.