2019 (2) TMI 939 - AT - Central Excise

CENVAT Credit - capital goods - immovable property - HR plates, MS sheets, MS plates, MS channels, joists, flats, squares, beams, etc., used for fabrication and erection of support structure for kiln plants for manufacture of sponge iron and demineralization plant to meet the requirement of water for the power plant and manufacture of sponge iron - Held that - From the perusal of the show-cause notices itself, it is found that, the usage of the goods have been mentioned in the show-cause notices itself and after noting the usage, the CENVAT credit is sought to be denied on the ground that the impugned goods have been used for fabrication and erection of support structures, which are embedded to earth and is not an input or a capital goods. Further, once usage is admitted in the show-cause notice itself, appellant is not required to prove the same by any documentary evidence. Further, this issue has consistently been considered by various Benches of the Tribunal and the High Court and it has been held that the MS plates, MS angles, channels, HR sheets used as inputs for fabrication/manufacture of supporting structures to various machines like kiln, conveyor system, demineralization plants are eligible for CENVAT credit. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against rejection of CENVAT credit on goods used for fabrication; Denial of credit by authorities; Admissibility of documentary evidence to prove usage; Interpretation of 'Capital Goods' under CENVAT Credit Rules, 2004.

Analysis:
The appellants filed appeals against the Commissioner (A)'s rejection of their CENVAT credit claims on goods used for fabrication of structures. The Range Officer identified the appellants' CENVAT credit claims on various items during specific periods as erroneous. Show-cause notices were issued, proposing to deny the credit on the grounds that the goods were embedded to earth, making them immovable property and falling outside the scope of 'Capital Goods' under Rule 2(a) of CENVAT Credit Rules, 2004. The original authority confirmed the demand due to lack of documentary evidence proving the fabrication of structures. The Commissioner (A) upheld this decision, leading to the appeals.

The appellant contended that the denial of CENVAT credit was unjust as the usage of the goods was already stated in the show-cause notices. They argued that producing documentary evidence to prove usage was unnecessary, citing legal precedents. They emphasized that the impugned goods were integral parts of the kiln structures, qualifying as 'Capital Goods' under Rule 2(a)(A)(iii) of CENVAT Credit Rules, 2004. The appellant also referenced Circular No.964/07/2012 to support their claim. Additionally, they highlighted decisions by various Tribunals and High Courts affirming the eligibility of similar goods for CENVAT credit.

The authorities rejected the CENVAT credit due to the appellants' failure to provide evidence of the goods' usage in fabrication. However, the Tribunal found that the show-cause notices acknowledged the goods' usage, making further proof unnecessary. Relying on legal precedents and consistent judicial interpretations, the Tribunal held that the appellants were entitled to the CENVAT credit on the impugned goods. Consequently, the impugned orders were set aside, and all three appeals of the appellant were allowed.