2019 (2) TMI 845 - AT - Central Excise

CENVAT Credit - capital goods - structural items i.e. MS channel, MS beams, angels, coils under Chapter 72 & 73 - scope of SCN - Held that - The show-cause notices were issued to the appellant alleging that the appellant has availed CENVAT credit on duty paid on HR sheets, coils, plates, angles as capital goods which are used for fabrication of structural parts for capital goods whereas the appellant authority has travelled beyond the scope of show-cause notice inasmuch as there was no requirement in the show-cause notices for producing documentary evidences for usage of the goods. The credit has been denied for the reason of non-submission of documents whereas the showcause notice itself confirms the usage of the capital goods. In the case of Renuka Sugars Ltd. Vs. CCE 2017 (5) TMI 47 - CESTAT BANGALORE , the Tribunal has considered various decisions of the Tribunal and the High Court and has come to the conclusion that various items like angles, channels, beams etc. are eligible for CENVAT credit if they are used for repair and maintenance of building or even for fabrication of structures. The impugned order is not sustainable in law - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against Commissioner(Appeals) order regarding eligibility of CENVAT credit on structural items used in fabrication of capital goods.

Analysis:
The appellant, engaged in sugar and molasses manufacturing, faced show-cause notices for availing ineligible CENVAT credit on structural items. The original authority confirmed demands, interest, and penalties. The appellant appealed to the Commissioner(Appeals), who dismissed the appeals. The appellant contended that the impugned order did not appreciate facts and law properly, citing various judicial precedents supporting eligibility for credit on goods used in structural support. The appellant also argued that the Commissioner(Appeals) exceeded the show-cause notice's scope by denying credit due to lack of documentary evidence on goods usage, contrary to the notice itself confirming usage. The appellant relied on CBEC Circular and past cases where similar credits were allowed.

The Assistant Commissioner argued against the appellant's entitlement to CENVAT credit on goods used for fabrication of structures, emphasizing the lack of documentary evidence on goods usage for plant and machinery maintenance. After reviewing submissions and case law, the Tribunal found that the original authority rejected credit solely based on goods' use for fabrication, not maintenance. The Tribunal noted that in the appellant's previous case, credits were allowed for goods used in maintenance, aligning with various judicial decisions supporting such credits. Citing specific cases and a Division Bench decision, the Tribunal concluded that the impugned order was unsustainable in law. Rulings from the Supreme Court and High Courts were considered, leading to the Tribunal allowing the appeals and providing consequential relief.

In conclusion, the Tribunal overturned the impugned order, allowing the appeals and providing relief based on the established eligibility of CENVAT credit for goods used in maintenance and repair of plant and machinery. The decision was pronounced in open court on 18/01/2019.