2018 (8) TMI 408 - AT - Central Excise

CENVAT Credit denied in respect of cables and capacitator - denial on the ground that the same are installed outside the factory premises and as such cannot be treated as capital goods - Held that - In the case of Parry Engineering & Electronics P. Ltd. vs. CCE & ST, Ahmedabad 2016 (1) TMI 546 - CESTAT AHMEDABAD , Larger Bench of the Tribunal has held that the Windmills installed outside the factory premises, at far of places, are cenvatable capital goods. The cables laid down by the assessee as also the other capital goods laid down en-route the grid and the factory premises for the purpose of transmission of electricity have to be held as cenvatable - Inasmuch as the assessee s appeal stands allowed nothing survives in the Revenue s appeal which is only in the context of interest and penalty - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Denial of Cenvat credit for cables and other capital goods laid down between the grid of the U.P. State Electricity Board and the assessee's factory.
2. Cross Objection against denial of Cenvat credit.
3. Whether capital goods installed outside the factory premises are eligible for Cenvat credit.

Analysis:

1. The appeal was filed by the Revenue against the order upholding the denial of Cenvat credit for cables and other capital goods laid down between the grid of the U.P. State Electricity Board and the assessee's factory. The Commissioner (Appeals) had set aside the penalty and did not confirm the interest. The assessee also filed a Cross Objection against the denial of Cenvat credit. The Tribunal noted that the denial was based on the grounds that the goods were installed outside the factory premises. However, citing a precedent case, it was argued that such goods, even when installed outside the factory premises, could be considered cenvatable capital goods. The Tribunal held in favor of the assessee, setting aside the demand against them.

2. The Tribunal addressed the Cross Objection filed by the assessee against the denial of Cenvat credit. By referring to a previous Larger Bench decision, it was established that goods like cables and other capital goods laid down en-route the grid and the factory premises for electricity transmission could be considered cenvatable capital goods. Therefore, the denial of credit was deemed unjustifiable, and the confirmation of demand against the assessee was set aside.

3. As the assessee's appeal was allowed, the Tribunal found no merit in the Revenue's appeal concerning interest and penalty. Consequently, the Revenue's appeal was rejected. Both appeals were disposed of accordingly, with the decision in favor of the assessee regarding the eligibility of capital goods installed outside the factory premises for Cenvat credit.