2022 (12) TMI 132 - AT - Central Excise

CENVAT Credit - capital goods - Cement, TMT bars, MS angles, channels, beams, racks, plates, etc. used for making foundation of machineries installed in the factory premises and for making structure for support of the plant and machinery - period April 2008 to April, 2010 - Rule 2(a) of Cenvat Credit Rules, 2004 - credit was denied mainly on the ground that the amendment in Rule 2(a) brought by notification no. 16/2009-CE (N.T.) barred the availment of cenvat credit on the goods in question from retrospective effect - HELD THAT - Reliance placed in larger bench judgment of the tribunal in the case of VANDANA GLOBAL LTD. VERSUS CCE 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) . In this regard, we find that much water was flown on this issue and not only the VANDANA GLOBAL LTD. larger bench judgment was upset by the Hon ble Chhattisgarh High Court in the case of M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT but also by various subsequent judgment mainly by jurisdictional high court in the case of MUNDRA PORTS AND SPECIAL ECONOMIC ZONE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS 2015 (5) TMI 663 - GUJARAT HIGH COURT . In view of the legal position, the amendment of notification no.16/2009-CE (N.T.) was held to be inapplicable for the period prior to the date of notification i.e. 07.07.2009. On this ground, the denial of cenvat credit by the adjudicating authority is not legal and correct. Period post 07.07.2009 - it is the submission of the appellant that the credit subsequent to this date was already taken prior to 07.07.2009 - HELD THAT - The credit was already accrued before the amendment of Rule 2(a) of Cenvat Credit Rules, 2004 therefore, the amendment of notification no. 16/2009-CE (N.T.) shall not apply on such credit which was accrued prior to 07.07.2009. Moreover, the appellant have claimed the credit under capital goods. Such capital goods were as parts and components used as support structure for plant and machinery erected and installed in the factory of the appellant. On this ground also the credit is admissible to the appellant accordingly, we are of the considered view that appellant are entitled for cenvat on the goods in question as per the settled legal position in the various judgments cited by them particularly in the case of Hon ble Chhattisgarh High Court judgment in VANDANA GLOBAL LTD. and Hon ble Gujarat High Court in the case of MUNDRA PORTS SPECIAL ECONOMIC ZONE LTD. The impugned order is not sustainable hence, the same is set aside - Appeal allowed.

Summary

Issues:
Whether the appellant is entitled to cenvat credit for goods used in making foundation of machineries and support structures as capital goods under Rule 2(a) of Cenvat Credit Rules, 2004 for the period April 2008 to April 2010.

Analysis:
The appellant contended that denial of credit was based on an amendment excluding goods from the definition of inputs, but argued that the goods were used for manufacturing capital goods or as parts of machinery, making credit admissible. They cited the reversal of the VANDANA GLOBAL LTD. judgment by the Chhattisgarh High Court and the Gujarat High Court's decision in MUNDRA PORTS & SPECIAL ECONOMIC ZONE LTD. to support their claim. Post-July 2009, they claimed 50% credit, arguing that the credit accrued before the amendment and was admissible under capital goods. Several judgments were cited in support, including decisions involving GUJARAT AMBUJA CEMENT LTD., HINDUSTAN ZINC LTD., and others.

The revenue reiterated the findings of the impugned order, which denied cenvat credit for goods used in machinery foundation and support structures due to the retrospective effect of an amendment in Rule 2(a). However, subsequent judgments, including the Chhattisgarh High Court's ruling in VANDANA GLOBAL LTD. and the Gujarat High Court's decision in MUNDRA PORTS & SPECIAL ECONOMIC ZONE LTD., held that the amendment was not applicable retrospectively. Therefore, the denial of cenvat credit based on the amendment was deemed incorrect.

The Tribunal found that the denial of cenvat credit by the adjudicating authority was not legally sound. The amendment to Rule 2(a) was held inapplicable for the period before 07.07.2009, and for the period post this date, the credit was deemed accrued before the amendment, making it admissible. The appellant's claim under capital goods for parts and components used in support structures for machinery further supported the admissibility of credit. The Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief as per the law.

In conclusion, the Tribunal held that the appellant was entitled to cenvat credit for goods used in machinery foundation and support structures as capital goods, based on the legal position established in relevant judgments, particularly those of the Chhattisgarh High Court and the Gujarat High Court.