2020 (11) TMI 540 - AT - Central Excise

CENVAT Credit - input - input services - Cement, TMT Bar, Beam, Angle, Channels Joist etc. - inward transportation services - HELD THAT - The Ld. Adjudicating authority had confirmed the demand of recovery of Cenvat credit on items such as Cement, TMT Bar, Beam, Angle, Channels Joist by relying on the judgment of the Larger bench of the Tribunal in the case of VANDANA GLOBAL LTD. VERSUS CCE 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) ,. However, the said judgment, as rightly pointed by the Ld. CA has been quashed by the Hon ble High Court of Chattisgarh. Also, the Hon ble Calcutta High Court had in the case of SURYA ALLOY INDUSTRIES LTD. VERSUS UNION OF INDIA 2014 (9) TMI 406 - CALCUTTA HIGH COURT had disapproved the judgment of the Larger Bench. Thus, the Cenvat credit of the items along with Service tax credit of inward transportation for such items is an eligible Cenvat credit upto 06/07/2009 and hence we are of the view that the appeal to this extent ought to be allowed. The usage of various iron and steels items is to be analysed in light of the decision of the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS LTD. 2010 (7) TMI 12 - SUPREME COURT . In this judgement, the Hon ble Supreme Court has referred to the user test outlined in the case of COMMISSIONER OF C. EX., COIMBATORE VERSUS JAWAHAR MILLS LTD. 2001 (7) TMI 118 - SUPREME COURT , which lays down the ratio in determining whether particular goods could be categorized as capital goods or not. As regards the period post 07/07/2009, it is seen from the records that the Appellant has already reversed a substantial amount of Cenvat credit being ₹ 16,29,837/-. Since the issue therein was in respect of interpretation of law, we are of the considered view that there cannot be any deliberate suppression, as alleged in the impugned order. Appeal disposed off.

Summary

Issues:
Appeal against Order-in-Original regarding wrongful availment of Cenvat credit, eligibility of Cenvat credit on specific items, waiver of penalty, retrospective application of Cenvat Credit Rules amendment, interpretation of law post 07/07/2009.

Analysis:
The Appellant, engaged in manufacturing clinker and cement, appealed against an Order-in-Original alleging wrongful availment of Cenvat credit. The Adjudicating Authority confirmed a demand of ?97,55,149 along with interest and penalty. The Appellant claimed eligibility for a reduced credit of ?81,25,312 based on pre-amendment rules and reversed a portion post-amendment. The Appellant cited judgments overruling Vandana Global and requested a penalty waiver for the reversed amount.

The Department justified the Order citing Vandana Global judgment, stating the amendment was clarificatory and retrospective. The Tribunal noted conflicting views in judgments and examined the eligibility of Cenvat credit on specific items. Quashing Vandana Global, the Tribunal considered Surya Alloy Industries and ruled in favor of the Appellant, allowing the credit for items like Cement, TMT Bar, etc., up to 06/07/2009. The Tribunal referenced the 'user test' from Rajasthan Spinning & Weaving Mills for analyzing iron and steel items' usage.

Regarding the post-07/07/2009 period, the Tribunal observed the Appellant had already reversed a substantial amount of credit and found no deliberate suppression. Citing the interpretation of law, the Tribunal disposed of the appeal favorably for the Appellant. The judgment emphasized the Appellant's compliance and the absence of deliberate suppression, leading to the appeal's disposal in the Appellant's favor.

This detailed analysis covers the issues of wrongful Cenvat credit availment, eligibility on specific items, penalty waiver, retrospective rule application, and interpretation post-amendment. The Tribunal's decision considered legal precedents, conflicting judgments, and compliance factors to provide a comprehensive and just resolution in the Appellant's favor.