2018 (11) TMI 222 - AT - Central Excise

CENVAT Credit - capital goods - steel items viz. HR Coils, Sheets, Joists, MS Channels, MS Flats, MS Angles, etc., in the Sugar Plant Machinery to erect Molasses Tank-II - denial of credit on the ground that appellant had not produced any authentic record to prove that the steel items were meant only for the construction of Molasses Tank and not otherwise - Held that - Undoubtedly, the courts have held that the HR Coils, Sheets, Joists, MS Channels, MS Flats, MS Angles, etc., used in the fabrication of Capital Goods are eligible for CENVAT Credit. It is also an admitted position of law that Capital Goods as defined under Rule 2(a) ibid. includes even a storage tank also. In this view of the matter, the only exercise that needs to be undertaken by the appellant is to establish that the above steel items were in fact used in the construction/erection of Molasses Tank-II. There are no finding or observation on any of the documents including the certificate of the Chartered Engineer. It is also a fact that in the very foundation, i.e., Show Cause Notice itself, the adjudicating authority had assumed that the above steel items were used in the fabrication of Molasses Tank. Thus, the certificate of Chartered Engineer would only support this. The matter needs to be re-looked into by the adjudicating authority who shall give a finding after considering all such necessary documents including the certificate - appeal allowed by way of remand.

Summary

Issues:
Alleged wrongful availment of CENVAT Credit on steel items for construction of Molasses Tank; Confirmation of proposals by adjudicating authority; Rejection of appeal by Commissioner; Appeal before Appellate Tribunal.

Analysis:
The appellant, a manufacturer of Sugar and Molasses, faced a Show Cause Notice alleging wrongful CENVAT Credit availment on steel items for constructing Molasses Tank-II. The adjudicating authority confirmed the proposals due to lack of authentic records proving the steel items were solely for the tank construction. The Commissioner rejected the initial appeal, leading to the current appeal before the Appellate Tribunal.

During the hearing, the appellant's advocate argued that the steel items were indeed used for the tank's fabrication, supported by a Chartered Engineer's certificate. He cited legal precedents to justify CENVAT Credit eligibility for such items. On the other hand, the Revenue's representative contended that the appellant failed to prove exclusive use of steel items for the tank construction, highlighting discrepancies in the Chartered Engineer's certificate.

The Tribunal noted that steel items like HR Coils, Sheets, etc., used in Capital Goods fabrication are eligible for CENVAT Credit. It emphasized the need for the appellant to demonstrate the steel items' specific use in Molasses Tank-II construction. Finding no conclusive findings on the submitted documents, including the certificate, the Tribunal remanded the matter to the adjudicating authority for a fresh decision. The authority was instructed to consider all evidence, including the certificate, and provide the appellant with fair opportunities during the proceedings, guided by relevant legal decisions.

Ultimately, the appeal was allowed for remand purposes, emphasizing the importance of a thorough reevaluation by the adjudicating authority with proper consideration of all relevant documents and guidance from binding legal precedents.