2019 (5) TMI 254 - AT - Central Excise

CENVAT Credit - profile sheets which has been installed above the machines used to manufacture the finished goods - HELD THAT - Appellants have used the profile sheets for covering the manufacturing area. Further, after the amendment in the definition of input w.e.f. 01.04.2011, the input includes all the goods which are used in the factory of production by the manufacturer as input. Further, in the present case the profile sheets have been used to comply with the statutory requirement of Pollution Control Laws and if they are not used and the machineries are left open in the area it may cause hazardous and therefore the usage of the profile sheets cannot be regarded as having remote connection with manufacture. Extended period of limitation - Suppression of facts or not - HELD THAT - The appellants have been filing the returns regularly and has been giving all the details of cenvat credit availed and moreover it was also verified by the audit team during the course of audit which happened in the month of July 2012 whereas show-cause notice was issued on October 28, 2014 alleging suppression with intent to evade payment of duty - the appellants have also supplied all the details regarding the cenvat credit availed by him to the Department vide Postal Acknowledgement Annexure-E dated 15.06.2012 which also shows that the Department had complete details regarding the cenvat credit availed by the appellant on profile sheets but in spite of that they did not issue the show-cause notice within the period of limitation. Appeal allowed on merits as well as on limitation.

Summary

Issues:
- Entitlement to cenvat credit on profile sheets used in manufacturing process
- Classification of profile sheets as 'input' under Cenvat Credit Rules, 2004
- Barred by limitation: Allegation of suppression with intent to evade payment of duty

Entitlement to Cenvat Credit on Profile Sheets:
The appeal was against the Commissioner (Appeals) order disallowing cenvat credit on profile sheets used in manufacturing Sponge Iron and TMT. The Department contended that these sheets were not eligible for credit. The appellant argued that the sheets were essential for compliance with pollution control laws and environmental clearance, ensuring safety during the manufacturing process. The appellant emphasized that the sheets were used within the factory for production and were not part of any civil structure. The appellant cited relevant case laws to support their claim and highlighted the technological necessity of the sheets for machinery operation.

Classification of Profile Sheets as 'Input':
The appellant maintained that the profile sheets should be classified as 'input' under the Cenvat Credit Rules, 2004. They argued that the sheets were integral to the manufacturing process and were directly used within the factory for production. The appellant presented a report from a Structural Engineer confirming the necessity of the sheets for safety and operational requirements. The appellant contended that the usage of profile sheets was in line with the definition of 'input' post the amendment effective from April 2011.

Barred by Limitation - Allegation of Suppression:
The Department alleged suppression with intent to evade payment of duty, invoking the extended period of limitation. However, the appellant demonstrated regular filing of returns with detailed cenvat credit availed information, which was also verified during an audit. The appellant argued that there was no suppression of facts as all details were provided to the jurisdictional authorities. Citing a relevant tribunal decision, the appellant emphasized that the demand was time-barred due to the Department's knowledge of the cenvat credit availed, as evidenced by postal acknowledgments and timely submissions.

In the final judgment, the Tribunal found in favor of the appellant, allowing the appeal on both merit and limitation grounds. The Tribunal concluded that the profile sheets were essential for the manufacturing process, complying with statutory requirements and operational needs. The Tribunal also held that the demand was barred by limitation, given the regular filing of returns and the Department's knowledge of the cenvat credit availed. Consequently, the impugned order was set aside, granting relief to the appellant.