2023 (8) TMI 696 - AT - Central Excise

Wrongful availment of CENVAT Credit - Central Excise Tariff Act, 1985. A show-cause notice for the period April 2010 to June 2012 was issued to them alleging that they have wrongly availed and utilized cenvat credit on MS Plates, HR Plates, Steel Plates etc. which are used for the fabrication of huge storage tanks - period April 2010 to June 2012 - HELD THAT - The issue is no more res integra and decided by the jurisdictional High Court in the case of COMMISSIONER OF C. EX., MYSORE VERSUS ICL SUGARS LTD. 2011 (4) TMI 1065 - KARNATAKA HIGH COURT where it was held that assessing authority has himself extended the benefit to storage tank storing water as a component to main machinery namely, boiler, he ought to have extended the benefit to the storage tanks which are also part of the factory premises, in which the bye-products are stored and thereafter sold as a finished product, no justification to interfere with the orders passed by appellate authority. The said principle was later followed by the Hon ble High Court in the case of SLR Steels Ltd. 2012 (9) TMI 169 - KARNATAKA HIGH COURT and Hindalco Industries Ltd. 2012 (11) TMI 201 - KARNATAKA HIGH COURT - demand set aside - appeal allowed.

Summary

Issues involved: Admissibility of cenvat credit on inputs used in fabrication of storage tanks, demand for cenvat credit with interest and penalty, applicability of Rule 3(1) of CCR, extended period of limitation, interpretation of judgments by High Courts.

Admissibility of Cenvat Credit on Inputs:
The appeal was filed against an Order-in-Original alleging wrongful availing of cenvat credit on various inputs used for fabrication of storage tanks by an oil refinery. The issue was whether cenvat credit on inputs like MS Plates, HR Plates, Beams, etc., used in the fabrication of storage tanks during April 2010 to June 2012 is admissible. The appellant argued that the admissibility of such credit has been settled by the Hon'ble High Court of Karnataka and Madras High Court in various cases. The Tribunal noted that the jurisdictional High Court had previously decided on the admissibility of cenvat credit on inputs used in the construction of storage tanks, citing specific judgments. It was observed that the benefit of cenvat credit extends to inputs used in the construction of storage tanks, following the reasoning laid down in previous cases. Consequently, the impugned order demanding cenvat credit was set aside, and the appeal was allowed.

Demand for Cenvat Credit and Penalty:
The Commissioner of Central Excise and Service Tax had issued a show-cause notice to the appellants, demanding a total cenvat credit of Rs. 2,83,73,710/- for wrongly availing credit on inputs used for fabrication of storage tanks. The demand was made with interest and penalty invoking the extended period of limitation. The demand was confirmed with interest and penalty upon adjudication. However, the appellant contended that the demand was barred by limitation as no information was concealed from the Department, as evidenced by the regular filing of returns reflecting the credit taken on various inputs. The Tribunal, after considering the arguments, set aside the impugned order confirming the demand, thereby allowing the appeal.

Interpretation of Judgments by High Courts:
The learned Advocate for the appellant referred to judgments by the Hon'ble High Courts of Karnataka and Madras, establishing the admissibility of cenvat credit on inputs used in the fabrication of storage tanks. The Tribunal acknowledged the settled position on this issue as decided by the jurisdictional High Court and other High Courts. The Tribunal noted the specific observations made by the High Courts regarding the definition of capital goods and the eligibility of cenvat credit on inputs used in the construction of storage tanks. Relying on the principles laid down in these judgments, the Tribunal set aside the impugned order confirming the demand for cenvat credit, allowing the appeal with consequential relief as per law.