2018 (7) TMI 606 - AT - Central Excise

CENVAT Credit - capital goods - Rule 4 (2) of Cenvat Credit Rules - Held that - Apparent and admitted fact is that the utilization in the present case is for the months of January to March, 2011 (three months only) and the remaining availed cenvat credit is lying as unutilized credit. The same has nowhere been disputed by the Department also, rather it is very much apparent from para 3 of the show cause notice. In the given circumstances, since the Revenue has not denied that 50% of the availed Cenvat Credit has been reversed even prior to the show cause notice and that the entire amount has not been utilised except for last three months of year 2010 but has issued the show cause notice even based upon Rule 14 as is impressed upon during the arguments, is not sustainable. CENVAT credit - MS bars - Held that - The article in question i.e. MS Bars since has not been customized / fabricated in such other form to have been exclusively fastened to the cranes herein but have merely been utilized in their existing form for a pathway meant for these cranes, the MS bars in the given circumstances, to my opinion, do not even fall under the definition of either component or spare or accessories of the capital goods as mentioned in Rule 2 (a) (iii) of CCR, 2004. Appeal allowed in part.

Summary

Issues:
1. Availment of 100% Cenvat Credit on capital goods
2. Cenvat Credit of duty paid on M.S. Bars

Analysis:

*Issue 1: Availment of 100% Cenvat Credit on capital goods*

The appellant inadvertently availed 100% Cenvat Credit on capital goods instead of the permissible 50%. The Department issued a show cause notice for recovery. The Commissioner (Appeals) set aside part of the demand, but confirmed the remaining. The appellant argued that the mistake was due to new staff and reversed 50% credit upon realization. Rule 4(2) of Cenvat Credit Rules was cited to support that the availment was not restricted, only utilization. The Department contended that the reversal was done after the show cause notice and penalties should apply. The Tribunal found that the appellant had indeed availed 100% credit but only utilized it for three months. The demand for the entire amount was deemed unjustified, but interest for the utilized amount was upheld.

*Issue 2: Cenvat Credit of duty paid on M.S. Bars*

The appellant used M.S. Bars for crane pathways, arguing they were essential for crane operation, thus qualifying as capital goods under Cenvat Credit Rules. The Department disagreed, stating M.S. Bars are general items and not inherently capital goods. The Tribunal examined relevant definitions and case laws. It concluded that the M.S. Bars, not customized for exclusive crane use, did not qualify as components or accessories of capital goods. The demand for Cenvat Credit on M.S. Bars was confirmed.

In conclusion, the appeal was partly allowed concerning the first issue, with the appellant held liable for interest on the utilized Cenvat Credit. However, the demand for Cenvat Credit on M.S. Bars was upheld based on the analysis of relevant rules and case laws.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision on each matter.