2023 (11) TMI 721 - AT - Central Excise

CENVAT Credit - Capital goods and inputs used for Capital goods - Refractory material - invocation of extended period of limitation - suppression of facts or not - HELD THAT - From the Order passed by the Adjudicating Authority, it is observed that he has been guided by the Larger Bench decision in the case of Vandana Global 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) . The Appellant has provided proper Chartered Engineer s Certificate clearly specifying the usage of Steel items in various capital goods. The Tribunals/Courts have been consistently holding that when the capital goods that are embedded are required for manufacture of the finished goods, Cenvat Credit cannot be denied. Reliance can be placed in CCE, Trichy Vs India Cements Ltd. 2004 (175) ELT-476 2004 (5) TMI 441 - CESTAT, CHENNAI where it was held that the credit would be admissible on Rebar coils, CTD bars, TOR Steel, joists and cement. Refractory items - HELD THAT - They are required for maintenance of boiler and furnaces without which finished goods cannot be manufactured, hence the Cenvat Credit on the same cannot be denied. Extended period of limitation - suppression of facts or not - HELD THAT - In the present case, no evidence has been brought in by the Revenue to fortify their allegation of suppression on the part of the Appellant. The Appellant has filed their Monthly Returns properly declaring the Cenvat taken by them on various counts. The Tribunals have been consistently holding that when the issue is that of interpretation, suppression clause cannot be invoked against the assesse. Therefore, the assesse could be having bonafide belief that they are eligible for Cenvat Credit. Accordingly, the demand in respect of the extended period is required to be set aside on account of time bar also. Appeal allowed both on merits as well as on account of limitation also.

Summary

Issues Involved:
1. Eligibility of Cenvat Credit on Capital Goods and Inputs.
2. Eligibility of Cenvat Credit on Refractory Materials.
3. Invocation of the Extended Period for Demand.
4. Transfer of Cenvat Credit from Previous Ownership.

Summary:

1. Eligibility of Cenvat Credit on Capital Goods and Inputs:
The Appellants, manufacturers of MS Ingots and other products, claimed Cenvat Credit on various inputs and capital goods used within their factory premises. The Adjudicating Authority denied the credit, relying on the case law of Vandana Global Ltd. vs. CCE, Raipur. However, the Appellants argued that the items in question were essential for the manufacture of finished goods, supported by a Chartered Engineer's Certificate. The Tribunal noted that several case laws, including Triveni Engineering & Industries Ltd. vs. CCE and Sirpur Paper Mills Ltd., held that even if capital goods are embedded, Cenvat Credit cannot be denied. The Tribunal concluded that the Adjudicating Authority's decision was incorrect and set aside the demand on merits.

2. Eligibility of Cenvat Credit on Refractory Materials:
The Appellants contended that refractory materials used in the Boiler and Furnace, essential for manufacturing finished goods, should be eligible for Cenvat Credit. The Tribunal agreed, citing that these materials are necessary for the maintenance of equipment crucial for production, and thus, credit on these items cannot be denied.

3. Invocation of the Extended Period for Demand:
The Appellants argued that the extended period for demand was wrongly invoked as they had been filing their Monthly Returns and were subjected to audits without any objections from the Department. The Tribunal observed that the issue was a matter of interpretation and not suppression, referencing several cases where similar demands were set aside due to time bar. Consequently, the Tribunal held that the demand for the extended period was not justified and set it aside on account of time bar.

4. Transfer of Cenvat Credit from Previous Ownership:
The Appellants had taken over the factory from a previous owner and claimed eligibility for Cenvat Credit on the transferred assets. The Tribunal noted that the Appellants had filed the necessary documents to amend the Central Excise Registration and had undertaken to fulfill all liabilities, including those of the previous owner. Citing case laws like Apco Industries Ltd. vs. CCE and Solaries Bio-Chemicals Ltd. vs. CCE, the Tribunal held that the transfer of credit was permissible as the factory was fully transferred, including assets and liabilities. The Tribunal found that the Adjudicating Authority had not properly verified the facts and set aside the impugned order on merits.

Conclusion:
The Tribunal allowed the Appeal both on merits and on account of limitation, granting the Appellants eligibility for Cenvat Credit and setting aside the demand for the extended period. The Appellants were deemed eligible for consequential relief as per law.