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2018 (12) TMI 4 - AT - Central ExciseRecovery of wrongly availed CENVAT Credit - demand on the ground that the Captive Power Plant being a turn-key project was not excisable goods as per Board s Circular No. 58/1/2002-CX dated 15.01.2002 and that the components, equipment, accessories and spares used for installing the Power Plant were not covered under Rule 2b(iii) of the CCR, 2002 - Held that - Reliance placed on the judgement in the case of M/s. Thiru Arooran Sugars Ltd. Vs. CESTAT, Chennai & anor. 2017 (7) TMI 524 - MADRAS HIGH COURT , wherein the Hon ble Madras High Court has held that MS Angles, Channels, etc. being an integral part of the Power Plant and Machinery, were eligible for credit - credit allowed - appeal allowed - decided in favor of appellant.
Issues:
1. Eligibility of CENVAT Credit on MS Angles, Bars, and Channels used in the fabrication of a Power Plant. 2. Interpretation of Rule 2(a)(A)(iii) of the CENVAT Credit Rules, 2004 regarding components, spares, and accessories. 3. Application of the 'User Test' in determining eligibility for credit. 4. Precedential value of judgments from the Hon'ble High Court and CESTAT, Chennai. Issue 1: Eligibility of CENVAT Credit on MS Angles, Bars, and Channels: The appellant, engaged in manufacturing Caustic Soda Lye, availed CENVAT Credit on capital goods like a Gas-based Power Plant. A Show Cause Notice challenged this credit. The Order-in-Original allowed credit for some machineries but denied it for MS Angles, Bars, and Channels. The appellant argued these were integral to the Power Plant, citing a High Court judgment and the 'User Test.' The Revenue disagreed, relying on a CESTAT decision. The Member (Judicial) considered the arguments, emphasizing the binding nature of the High Court's decision. Following precedent, the appellant was deemed eligible for credit, leading to the appeal's allowance. Issue 2: Interpretation of Rule 2(a)(A)(iii) of CENVAT Credit Rules: The disagreement centered on whether Rule 2(a)(A)(iii) applied to movables only. The Revenue contended that the impugned Order's demand was correct. However, the Member (Judicial) referenced the larger Bench decision and the High Court's ruling to support the appellant's eligibility for credit. Judicial propriety dictated following the High Court's ratio decidendi, leading to the setting aside of the impugned Order. Issue 3: Application of the 'User Test' for credit eligibility: The appellant invoked the 'User Test' established by the Supreme Court, arguing that MS Angles, Bars, and Channels were essential for the Power Plant's functionality. Citing the High Court's judgment, the appellant asserted eligibility for credit. The Member (Judicial) found merit in this argument, aligning with the High Court's decision and allowing the appeal based on the 'User Test' principle. Issue 4: Precedential value of judgments from High Court and CESTAT, Chennai: The Member (Judicial) emphasized the significance of following the High Court's decision, which had been upheld by the Tribunal in the appellant's previous case. By adhering to the High Court's ruling and established precedent, the appellant's eligibility for credit was confirmed, resulting in the appeal's allowance with consequential benefits as per law. This comprehensive analysis of the judgment highlights the key issues addressed, the arguments presented by both parties, and the Member's decision based on legal principles and precedents.
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