9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (12) TMI 1062 - AT - Central ExciseCENVAT Credit - capital goods/input services - rails utilised in the construction of railway-line from Muddanur Railway Station to the factory premises of the appellant which was to run for merely 10 kms - input services used for the construction of the appellants manufacturing units - HELD THAT - The goods which are used in the manufacture of capital goods which are further used in the factory of the manufacture are inputs. Therefore, the input is not necessarily to be used in the manufacture of final product. By virtue of explanation goods used in the manufacture of capital goods which are further used in the factory of the manufacturer of capital goods also falls within the definition of input. In 2009, this explanation has been amended to the effect as recorded above. Also definition of capital goods is not confined to cl. of Rule 2(a) CCR, 2004 but extends to all other clauses therein. As per clause (iii) thereof it is clear that if anything is component, spare accessories to such input as may full under cl (i) of Rule 2(a) CCR, 2004, same also becomes capital goods - the goods which are denied CENVAT Credit in these appeals are such without which the capital goods/inputs relevant to manufacture the final product cannot function. Thus, the goods under question also became the capital goods. There is no denial for the rails/sleepers to partly within the manufacturing unit/factory of appellant. Irrespective it extends outward but admittedly is used for the transport of rawmaterial inside the factory for manufacturing final product. Thus is the part and parcel for the manufacturing unit composed of capital goods which cannot function without these rails - further, there is no evidence on record to show that any of the capital goods as that of pipes, pumps etc. or other steel structures as mentioned in the above tables to have been used in construction of factory shed or for laying of the foundation. Those rather appear to have been used in connecting the machinery installed in the factory premises of the appellant which is meant for manufacture of the final product or are such as have been used as an integral part thereof. Hon ble Apex Court in the case of VIKRAM CEMENT VERSUS CCE, INDORE 2006 (2) TMI 1 - SUPREME COURT has held that the repair and maintenance of pumps and pipes outside the factory premises having nexus with the manufacture of final products even if utilised outside the factory premises would be eligible for CENVAT Credit. No evidence found by the department that rails/sleepers and other goods have no nexus with the manufacture of cement, the final product of the appellant, we are of the opinion that the adjudicating authority has wrongly denied the availment of CENVAT Credit to the appellants while confirming the reversal of the credit already availed - credit on rails allowed. Input services used for the construction of the appellants manufacturing units - HELD THAT - The said issue also stands no more res-integra as was held by Tribunal, Bombay in COMMISSIONER OF C. EX., NAGPUR VERSUS ULTRATECH CEMENT LTD. 2010 (7) TMI 302 - CESTAT, MUMBAI that the input services with respect to the Thermal Power though situated outside the factory premises are Cenvatable due to the nexus thereof with the manufacture of the final product Credit also denied on the ground that manufacturing activity not started - HELD THAT - The fact that manufacturing activity has not yet been started, is also not sustainable to deny the CENVAT Credit to the appellant. There is no rule or statutory provision which makes the manufacturing unit to be functional or the registration thereof, a condition precedent for availing credit. The CENVAT Credit shall be available on the documents evidencing receipt of eligible inputs, capita goods or input services even before the date assessee started the manufacturing activity or obtained the service tax registration. The credits can very well be adjusted after the manufacturing is started or registration is taken - Hon ble High Court of Karnataka in the case of COMMISSIONER OF SERVICE-TAX VERSUS TAVANT TECHNOLOGIES INDIA PVT LTD 2016 (3) TMI 353 - KARNATAKA HIGH COURT , while relying upon its previous decisions in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX 2011 (9) TMI 450 - KARNATAKA HIGH COURT , Karnataka has held that for availing as well as refund of untilized credit registration of Service Tax is not required. The adjudicating authority below has wrongly denied the CENVAT Credit to the appellant - Credit allowed - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether the duty paid on rails used in the construction of railway lines and other items are capital goods/inputs and thus could be availed by the appellants as CENVAT Credit. 2. Whether the input services used for the construction of the appellants’ manufacturing units are the input services which could be availed by the appellants as CENVAT Credit. 3. Whether the denial of CENVAT Credit based on the amendment of 07.07.2009 is justified. Issue-wise Detailed Analysis: 1. Duty Paid on Rails and Other Items as Capital Goods/Inputs: The department denied CENVAT Credit on rails, pipes, pumps, valves, and other items used in the construction of railway lines and pipelines, arguing that these do not fit the definition of ‘capital goods’ under Rule 2(a) of CCR, 2004. The appellant contended that these items should be considered as an extension of the factory and integral to the manufacturing unit. Key Findings: - The definition of capital goods includes components, spares, and accessories of machinery used in the factory. - The goods in question are essential for the functioning of capital goods used in the manufacturing process. - The Tribunal referenced several cases, including Vikram Cement Vs. CCE and Aditya Cement Vs. Union of India, which support the inclusion of such items as capital goods eligible for CENVAT Credit. - The Tribunal concluded that the goods used in the construction of the railway line and pipeline are integral to the factory and thus qualify as capital goods. 2. Input Services Used for Construction: The department argued that input services like travel agency, consulting engineer, and insurance services used during the construction phase should not qualify for CENVAT Credit as the manufacturing had not yet commenced. Key Findings: - The Tribunal cited the case of Ultratech Cement Ltd., which held that input services related to the construction of a manufacturing unit are eligible for CENVAT Credit due to their nexus with the final product. - The Tribunal found no statutory provision requiring the manufacturing unit to be operational or registered to avail of CENVAT Credit. - It was held that credits could be adjusted after manufacturing starts or registration is obtained. 3. Denial of CENVAT Credit Based on Amendment of 07.07.2009: The adjudicating authority applied the amendment of 07.07.2009 retrospectively to deny CENVAT Credit on items used for construction. Key Findings: - The Tribunal noted that the amendment was intended to operate prospectively, as clarified by the Hon'ble High Court of Gujarat in Mundra Ports Special Economic Zone Ltd. Vs. CCE. - The amendment explicitly stated its effective date as the date of publication, indicating no retrospective application. - The Tribunal held that the denial of CENVAT Credit based on this amendment for periods prior to 07.07.2009 was not justified. Conclusion: The Tribunal concluded that the adjudicating authority had wrongly denied CENVAT Credit to the appellants. The orders under challenge were set aside, and the appeals were allowed. The Tribunal emphasized that the goods and services in question were integral to the manufacturing process and eligible for CENVAT Credit, both before and after the amendment, provided they were not used in the construction of factory sheds or foundations post-07.07.2009.
|
