2022 (8) TMI 828 - AT - Central Excise

CENVAT Credit - inputs - structural items such as MS Angle, Plates, HR Sheets, CR Sheet, CR coil, Beam, MS Rod, Joist, MS Channel, and other Steel products used for manufacture of capital goods - period from 2007-08 to 2009-10 - 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 judgement 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 judgement, as rightly pointed by the Ld.Advocate has been quashed by the Hon ble High Court of Chhattisgarh. Also, the Hon ble Calcutta High Court in the case of SURYA ALLOY INDUSTRIES LTD. VERSUS UNION OF INDIA 2014 (9) TMI 406 - CALCUTTA HIGH COURT had disapproved the judgement of the Larger Bench. Thus, the Cenvat credit of the items mentioned is an eligible Cenvat credit upto 06/07/2009 and hence the appeal to this extent ought to be allowed. Further, it has been stated by the Ld.Advocate appearing for the Appellant, that they are not pressing for the same and only have requested for waiver of penalty as the issue involved interpretation of law. There are force in such argument as the issue is related to interpretation of law. Hence the imposition of penalty cannot be sustained in the instant case. Appeal disposed off.

Summary

Issues:
- Eligibility of Cenvat credit on certain steel items as input under Cenvat Credit Rules, 2004.
- Interpretation of retrospective amendment to Rule 2(k) w.e.f. 07/07/2009.
- Imposition of penalty on wrongful availment of Cenvat credit.

Analysis:

Issue 1: Eligibility of Cenvat credit on steel items as input:
The Appellant, engaged in steel manufacturing, availed Cenvat credit on various steel items for the manufacture of capital goods. The Department alleged wrongful availment outside the definition of 'input' under Section 2(k) of the Cenvat Credit Rules, 2004. The Adjudicating authority confirmed the demand, relying on the Vandana Global judgment. However, the Appellant argued that the judgment was overruled by the Chattisgarh High Court and the Calcutta High Court disapproved it. The Tribunal found the items eligible for Cenvat credit up to 06/07/2009, allowing the appeal to that extent.

Issue 2: Interpretation of retrospective amendment to Rule 2(k):
The Tribunal considered the retrospective amendment to Rule 2(k) w.e.f. 07/07/2009 by Notification No.16/2009-CE(NT). The Department justified the Adjudication order based on the Vandana Global judgment, stating the amendment was clarificatory and retrospective. However, the Tribunal noted conflicting views by different High Courts and allowed the Cenvat credit on the items mentioned up to 06/07/2009, following the judgments overruling Vandana Global.

Issue 3: Imposition of penalty on wrongful availment:
The Appellant did not press for the Cenvat credit post 07/07/2009, requesting waiver of penalty due to the interpretational nature of the issue. The Tribunal agreed, considering the issue related to the interpretation of law and thus set aside the penalty imposed. The appeal was disposed of accordingly, with the decision pronounced on 10 August 2022.

This judgment highlights the importance of legal interpretations, retrospective amendments, and the eligibility of Cenvat credit, providing clarity on the disputed issues and setting a precedent based on the overruling of previous judgments by higher courts.