2019 (1) TMI 240 - AT - Central Excise

CENVAT Credit - M.S. Angles M.S. Channels M.S. Joist Chequered Plates Gratings etc. used for fabrication of support structures - period April 2004 to April 2005 - scope of SCN - Held that - The order of the Commissioner (Appeals) is self-contradictory and has traveled beyond the scope of the SCN. It has thus appeared to the ld. Commissioner (Appeals) that the structural steels items are not proved to have been used in or in relation to the manufacture of capital goods or components spares and accessories of the capital goods specified in terms of Rule 2(a) of the Cenvat Credit Rules 2004. In absence of production of any primary evidence regarding the receipt issue consumption and inventory of these structural steel items the submission of the appellant is not sustainable. This is contrary to the allegation made in the SCN. Tribunal had remanded the matter in view of the pendency of the appeal before the Chhattisgarh High Court in the case of Vandana Global Ltd. 2018 (5) TMI 305 - CHHATTISGARH HIGH COURT wherein the Larger Bench of the Tribunal had held that the cenvat credit on inputs/structural items used for fabrication of foundation structural and supporting structures in the factory of production credit is not available. These are not goods and or capital goods being immovable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of the appellant for cenvat credit on items used for fabrication of support structures.

Analysis:
The main issue in this appeal was whether the appellant, engaged in manufacturing Sponge Iron, was eligible for cenvat credit on items like M.S. Angles, M.S. Channels, M.S. Joist, Chequered Plates, Gratings, etc., used for the fabrication of support structures during a specific period. The Tribunal had previously remanded the matter to the Adjudicating Authority due to a similar case pending before the Chhattisgarh High Court.

The show cause notice alleged that the appellant had availed cenvat credit on structural items used for various support structures in their factory premises. The officers verified the actual use of these inputs and observed their utilization in fabricating structures, walkways, galleries, platforms, staircases, etc. The appellant had received these items and availed cenvat credit, with a portion already reversed. The Commissioner (Appeals) disputed the admissibility of the credit, stating a lack of primary evidence regarding the usage of these structural steel items.

Upon hearing the parties and reviewing the contentions, the Tribunal found the Commissioner's order to be self-contradictory and beyond the scope of the show cause notice. The Tribunal referred to the Chhattisgarh High Court's judgment, which reversed the Larger Bench ruling and allowed credit for inputs used in fabricating support structures. Citing judgments from other High Courts, the Tribunal allowed the appeal, setting aside the impugned order and granting the appellant consequential benefits in accordance with the law.

In conclusion, the Tribunal ruled in favor of the appellant, allowing them to avail cenvat credit on the items used for fabricating support structures, based on the judgments of various High Courts and the reversal of the Larger Bench ruling by the Chhattisgarh High Court.