2023 (9) TMI 803 - AT - Central Excise

Levy of Excise Duty - Angles, Channels, Joist, TMT Bars etc. used captively for fabrication of capital goods/support structures which were embedded to earth - mis-utilization of the benefit of Notification No.67/95-CE(NT) - HELD THAT - It is not disputed by the revenue that these items have been used by the appellant for fabrication of capital goods which has been captively consumed for fabrication of capital goods and support structures which were ultimately used in manufacture of their final product i.e. ingot. Relying on the decision of the Hon ble Chhatisgarh 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 , wherein the Hon ble High Court has observed Section 37 of the Central Excise Act, 1944 is a rule making power. Section 37(2)(xvia) provide for the credit of duty paid or deemed to have been paid on the goods used in, or in relation to, the manufacture of excisable goods. Though the power to make rules include the power to give retrospective effect, while doing so the provision under consideration is neither made retrospective nor could it be treated as one. The appellant is not required to pay duty on the items in question which has been used by them captively for fabrication of support structures and capital goods as inputs, which has been ultimately used for manufacture of their final product, i.e. M.S. ingots wire rods - the impugned order is set aside - the appeal is allowed.

Summary

Issues involved:
The denial of cenvat credit on steel items along with interest and penalty.

Summary:

Issue 1: Denial of cenvat credit on steel items
The appellant, a manufacturer of rolled products, extended their factory by installing a new induction furnace unit for manufacturing MS ingots and wire rods. They claimed exemption under Notification No.67/95-CE for items used in construction. The department alleged duty evasion and issued a show cause notice. The appellant contended that the goods qualified as capital goods based on a Chartered Engineer Certificate. The dispute centered on whether the goods met the essential characteristics of movability and marketability for levy of duty. The appellant argued for eligibility of cenvat credit based on the Chartered Engineer's certification and cited a decision of the Chhatisgarh High Court. They also contested the invocation of the extended period for demand, claiming it was known to the department. The department supported the findings of the impugned order.

Issue 2: Eligibility of cenvat credit
The main issue was whether the items manufactured by the appellant and used for fabrication of capital goods/support structures, which were embedded to earth, rendered the appellant liable to pay duty. The revenue did not dispute that these items were used for fabrication of capital goods consumed internally and eventually used in the manufacture of the final product, ingots. Relying on a decision of the Chhatisgarh High Court, the Tribunal held that the appellant was not required to pay duty on the items used for fabrication of support structures and capital goods as inputs, ultimately used in the manufacture of their final product. The impugned order was set aside, and the appeal was allowed with any consequential relief.