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2019 (4) TMI 1590 - AT - Central ExciseCENVAT Credit - manufacture of Cement - capital goods or not - M.S. plates, bars angles, tors, channels and sheets etc. - period of dispute is December 2001 to April, 2003 - HELD THAT - The larger Bench of this Tribunal in M/S. MANGLAM CEMENT LTD. VERSUS C.C.E., JAIPUR-I 2018 (3) TMI 1547 - CESTAT NEW DELHI where the issue before the larger Bench was whether on Cement and Steel items used for foundation for installation of machinery, which is embedded to earth, the assessee is entitled to avail Cenvat Credit on steel items in terms of Rule 2(k)/2(a) of the Cenvat Credit Rules, 2004, or not, the question has been decided in favour of the assessee. The appellant is entitled to cenvat credit on the items of iron and steel - appeal allowed - decided in favor of appellant.
Issues involved:
1. Whether the appellant, a cement manufacturer, rightly took cenvat credit on certain iron and steel items treated as capital goods. 2. Interpretation of Cenvat Credit Rules, 2004 regarding the admissibility of credit on specific items. 3. Application of previous tribunal and high court decisions on similar issues. 4. Re-quantification of allowable credit as per tribunal directions. 5. Disallowance of cenvat credit by the Commissioner (Appeals) and subsequent appeal by the appellant. Issue 1: Admissibility of Cenvat Credit on Iron and Steel Items: The primary issue in this appeal was whether the appellant, a cement manufacturer, correctly availed cenvat credit on iron and steel items like M.S. plates, bars, angles, tors, channels, and sheets, which are not explicitly defined as capital goods under Rule 2(a) of the Cenvat Credit Rules, 2004. The dispute covered the period from December 2001 to April 2003. The revenue contended that the credit on these items was wrongly availed due to a misinterpretation of the Cenvat Credit Rules. The Commissioner (Appeals) initially disallowed the credit, which was upheld in subsequent orders. However, the appellant argued that recent legal precedents, including a Larger Bench ruling, supported their claim for cenvat credit on these iron and steel items. Issue 2: Interpretation of Cenvat Credit Rules, 2004: The crux of the matter revolved around the interpretation of the Cenvat Credit Rules, 2004, specifically Rule 2(a) regarding the definition of capital goods and the eligibility criteria for availing cenvat credit on iron and steel items used by the appellant in their manufacturing process. The appellant contended that the iron and steel items should be considered inputs or capital goods based on their usage in the manufacturing process. The Tribunal referred to previous decisions and legal interpretations to determine the admissibility of cenvat credit on these items. Issue 3: Application of Previous Legal Precedents: The Tribunal referenced previous legal precedents, including a Larger Bench ruling in Mangalam Cement Ltd., where the eligibility of cenvat credit on steel items used for machinery installation was decided in favor of the assessee. The Tribunal highlighted that goods used in the manufacture of capital goods, even for erecting foundations, should be considered for cenvat credit benefits. Additionally, the Tribunal cited a High Court decision that supported the eligibility of steel and cement used for laying foundations as integral parts of capital goods, thus qualifying for cenvat credit. Issue 4: Re-Quantification of Allowable Credit: After a remand by the Tribunal for re-quantification of allowable credit, the Commissioner (Appeals) allowed a portion of the cenvat credit as per the Tribunal's directions but disallowed a balance amount. The appellant challenged this disallowance, citing recent legal rulings that supported their claim for cenvat credit on the iron and steel items in question. The Tribunal, considering the recent legal interpretations and precedents, allowed the appeal and set aside the impugned order, granting the appellant consequential benefits in accordance with the law. Issue 5: Disallowance of Cenvat Credit by the Commissioner (Appeals): The Commissioner (Appeals) initially disallowed a portion of the cenvat credit claimed by the appellant, leading to the appeal before the Tribunal. The appellant argued that the disallowance was based on a now-overruled Tribunal decision and that recent legal developments supported their claim for cenvat credit on the iron and steel items. The Tribunal, following the rulings of the Chattisgarh High Court and the Larger Bench decision, allowed the appeal, overturning the disallowance of cenvat credit and entitling the appellant to consequential benefits as per the law. This detailed analysis of the judgment highlights the key legal issues, interpretations, precedents, and outcomes involved in the case.
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