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2022 (6) TMI 4 - AT - Central ExciseCENVAT Credit - capital goods - cement and iron steel items used for construction of storage tank - Explanation 2 of Rule 2(k) of Cenvat Credit Rules, 2004 with effect from 7.7.2009, retrospective or prospective - Capital goods becoming immovable property or not - HELD THAT - The issue involved in this matter is squarely covered by the decision of the Tribunal in appellant own case AMBUJA CEMENTS LTD (UNIT DADRI) VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, MUMBAI 2022 (1) TMI 1067 - CESTAT MUMBAI where it was held that As the facts of the case are not in dispute that the steel items in question has been used for fabrication of the capital goods which has ultimately been used for manufacture of their final product, in that circumstances, we hold that the appellant are entitled to CENVAT credit on the items in question. In appellant s own case THE COMMISSIONER, COMMERCIAL TAX, U.P. LUCKNOW VERSUS M/S. AMBUJA CEMENT LTD., SAHARANPUR 2017 (4) TMI 1280 - ALLAHABAD HIGH COURT it was held that The mere fact that machine, machinery, equipment, apparatus, tools or appliances, etc., are generally understood to be movable property, would not mean that plant also has to be necessarily treated as movable property only. There does not appear to be any rational to import the concept of movable or immovable goods while interpreting Section 2(f) of the Act, when the provision does not say so. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Admissibility of Cenvat credit on cement and iron & steel items used for construction of storage tanks. 2. Determination of whether storage tanks/silos constitute immovable property. 3. Applicability of the amendment to Explanation 2 of Rule 2(k) of Cenvat Credit Rules, 2004. 4. Interpretation of capital goods and their eligibility for Cenvat credit. Issue-wise Detailed Analysis: 1. Admissibility of Cenvat Credit on Cement and Iron & Steel Items Used for Construction of Storage Tanks: The appellant argued that storage tanks are specifically covered under Rule 2(a)(A)(vii) of the Cenvat Credit Rules, 2004, and thus, cement and iron & steel items used for their construction should be admissible as part/components/accessories of capital goods. The appellant relied on several precedents, including RSPL Ltd., Agrawal Structures Mills Pvt. Ltd., and Dhampur Sugar Mills Ltd., which supported the admissibility of Cenvat credit for such items. 2. Determination of Whether Storage Tanks/Silos Constitute Immovable Property: The Revenue contended that the storage tanks/silos were immovable properties, as they were attached to the earth and hence not goods. They argued that immovable property cannot be considered capital goods and cited several judgments, including Bharti Airtel Ltd. and TTG Industries, to support their stance. The Tribunal, however, referred to the "user test" established by the Supreme Court in Rajasthan Spinning Mills, which determined that steel plates and MS channels used in the fabrication of chimneys could be considered capital goods. It was noted that the Tribunal had previously decided in the appellant's favor on similar issues. 3. Applicability of the Amendment to Explanation 2 of Rule 2(k) of Cenvat Credit Rules, 2004: The appellant argued that the amendment to Explanation 2 of Rule 2(k) of the Cenvat Credit Rules, 2004, effective from 7.7.2009, was prospective and not retrospective. This argument was supported by the decisions in Vandana Global Ltd. and Mundra Ports & Special Economic Zone Ltd., which clarified that the amendment was not intended to be clarificatory and thus could not be applied retrospectively. 4. Interpretation of Capital Goods and Their Eligibility for Cenvat Credit: The Tribunal referred to its previous decisions, including Monnet Ispat & Energy Ltd., where it was held that steel items used for the fabrication of capital goods, which are ultimately used in the manufacture of final products, are eligible for Cenvat credit. The Tribunal also considered the decision of the Hon’ble Madras High Court in CCE v. India Cements Ltd., which held that MS plates, angles, and channels used in the erection of various machineries could be considered eligible for Cenvat credit as components of capital goods. Conclusion: The Tribunal found that the issue involved in this matter was squarely covered by its previous decision in the appellant’s own case, where it was held that the appellant was entitled to Cenvat credit on the items in question. The Tribunal noted that the decision of the Hon’ble Bombay High Court in Bharti Airtel Ltd. had been considered and distinguished in the context of the present dispute. The Tribunal also referred to the decision of the Hon’ble Chhattisgarh High Court in Vandana Global Ltd., which set aside the decision of the Larger Bench of the Tribunal relied upon by the Revenue. Consequently, the Tribunal set aside the impugned orders and allowed the appeals in favor of the appellant.
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