2024 (4) TMI 626 - AT - Central Excise

CENVAT Credit - capital goods - Immovable Property or not - fabrication and setting up of entire paint shop - entire demand has been quantified on the basis of the figures taken from the books of accounts maintained by the appellant - suppression of facts or not - Extended period of Limitation- HELD THAT - The department instead of analyzing whether these items fall under the category of capital goods and eligible for credit has analysed whether the paint shop as assembled at site is an excisable goods. The appellant has not availed credit on paint shop . They have availed credit on various machinery, parts, and components which have been used to set up paint shop. Some structural items falling under Chapter 73 have also been used for the fabrication and setting up of entire paint shop which is integral to carry out the activity of painting of cars. The department does not have a case that the items do not fall under 84, 85 of Central Excise Tariff Act 1985. In the case of M/s. HYUNDAI MOTOR INDIA LTD. VERSUS CCE ST LTU CHENNAI AND VICA-VERSA 2015 (12) TMI 940 - CESTAT CHENNAI the Tribunal considered the issue of availment of cenvat credit on items used for setting up paint shop and held that credit is eligible. In the case of M/S OMAX AUTO LIMITED VERSUS CCE, DELHI-III 2013 (8) TMI 301 - CESTAT NEW DELHI it was held that structures used in paint complex which is an integral part of the manufacture of motor vehicles used in the fabrication of paint complex is eligible for credit. The denial of credit is on the basis of erroneous appreciation of facts and law. The issue on merits is answered in favor of assessee. Extended period of limitation - Suppression of facts or not - HELD THAT - The demand has been raised on the basis of figures as reflected in the books of accounts maintained by the appellant. There is no positive act of suppression established by the department against the appellant. In the case of PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY 1995 (3) TMI 100 - SUPREME COURT the Hon ble Supreme Court while considering the issue of invocation of extended period observed that when facts are known to both sides there is no ground to invoke the extended period - there is no ground to invoke the extended period. The SCN is time barred. The issue on limitation is answered in favour of the appellant. The impugned order is set aside - appeal allowed.

Summary

Issues Involved:
1. Eligibility for CENVAT credit on items used for setting up a paint shop.
2. Invocation of the extended period of limitation for demand.

Summary:

1. Eligibility for CENVAT credit on items used for setting up a paint shop:
The appellant, engaged in the manufacture of motor cars under the brand name Nissan, availed CENVAT credit on materials used in the erection and commissioning of a paint shop. The department contended that the paint shop, being an immovable property, could not be considered excisable goods, thus denying credit under the category of capital goods. The appellant argued that they availed credit on machinery, parts, and components used to set up the paint shop, which are excisable goods under Chapter Headings 84 and 85 of the Central Excise Tariff Act 1985. The Tribunal found that the department erroneously analyzed whether the paint shop itself was excisable instead of the individual items used for its setup. Citing precedents such as Hyundai Motor India Ltd. Vs. CCE & ST LTU Chennai and Omax Auto Ltd. Vs. CCE, Delhi III, the Tribunal held that the items used for setting up the paint shop, falling under Chapter Headings 84, 85, 73, and 76, are eligible for credit as capital goods.

2. Invocation of the extended period of limitation for demand:
The demand was raised by invoking the extended period of limitation, alleging suppression of facts by the appellant. The appellant countered that they had disclosed all relevant details in their ER-1 returns and that the demand was based on figures from their maintained books of accounts. The Tribunal noted that the Show Cause Notice did not specifically allege suppression with intent to evade duty, merely stating that the credit availment would not have come to the department's knowledge without verification. Referring to the Supreme Court's decision in Pushpam Pharmaceuticals Vs. CCE, Bombay, the Tribunal emphasized that when facts are known to both parties, there is no ground for invoking the extended period. Consequently, the Tribunal held the SCN to be time-barred.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal with consequential relief as per law. The decision was pronounced in the open court on 15.04.2024.