2019 (2) TMI 1484 - AT - Central Excise

CENVAT Credit - input - angles, channels and other items used for support of capital goods - Held that - The issue in question has been decided in their favour in a number of judgments - reliance placed in the case of M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT , where it has been held that Section 37 of the Central Excise Act, 1944 is a rule making power. Section 37(2)(xvia) provide for the credit of duty paid or deemed to have been paid on the goods used in, or in relation to, the manufacture of excisable goods - appeal allowed - decided in favor of appellant.

Summary

Issues:
CENVAT credit on inputs used for support of capital goods in manufacturing process.

Analysis:
The case involved the appellants, manufacturers of cars, who availed CENVAT credit on inputs like angles, channels, hollow profiles, and panels used in the paint shop. The Department contended that CENVAT credit was not allowable for such items. The Commissioner issued an order demanding a substantial amount with interest and penalty. The appellants challenged this order before the forum.

During the hearing, the appellant's counsel argued that hollow profiles and panels were integral to the manufacturing process in the paint shop. These items facilitated the painting process, insulation of ovens, and overall efficiency in the manufacturing operations. The counsel cited various judgments and decisions of High Courts and Tribunals where similar issues were decided in favor of the appellants.

On the other hand, the Department's representative supported the findings of the impugned order and highlighted that the decision in Vandana Global Ltd. by the High Court of Chattisgarh was under appeal, indicating the matter was not settled.

The Bench, after hearing both sides, agreed with the appellant's counsel that the issue was no longer res integra. They referenced several judgments, including Thiru Arooran Sugars, Hyundai Motors India Ltd., and others, where similar issues were decided in favor of the assessees. The Bench also discussed the decision of the Larger Bench of the Tribunal, which was overturned by the High Court of Chattisgarh, emphasizing that the amendment in the CENVAT Credit Rules could not be treated as clarificatory.

The Bench analyzed the relevant provisions of the Central Excise Act, 1944, and concurred with the decisions in Mundra Ports and M/s. Thiruarooran Sugars. Consequently, the Bench ruled in favor of the assessees and against the Revenue, allowing the appeals and setting aside the impugned order. The appeal was allowed with consequential relief, if any, as per law, and no costs were awarded. The impugned order was held unsustainable and set aside, providing relief to the appellants.