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2024 (5) TMI 557 - AT - Central ExciseCENVAT Credit - inputs/capital goods - MS Angles/Channels, HRC Plates, TMT bars etc., used in fabrication/erection of machinery - denial on the ground that MS items used for structural support and foundation would not fall under the category of capital goods relying on the decision of VANDANA GLOBAL LTD. VERSUS CCE 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) - period March 2008 to April 2010 - HELD THAT - The show cause was issued based on the Larger Bench ruling of this Tribunal in Vandana Global Ltd., which judgment have been reversed and allowed in favour of the assessee by the Hon ble Chattisgarh High Court in M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT . In this view of the matter, the appellant is entitled to Cenvat Credit of the capital goods / inputs like EOT Cranes, 3D Marking and Layout Machine, Sand Feed Hopper, Reclamation Tower, Rail for transfer car etc., which have been admittedly received in the factory for use. We further hold, eligibility to Cenvat Credit has to be considered on the day goods are received. It is not the subsequent user which decides the eligibility of Cenvat Credit. The impugned order is set aside - appeal allowed.
Issues involved:
The appeal concerns the dis-allowance of Cenvat Credit on MS Angles/Channels, HRC Plates, TMT bars used in machinery fabrication from March 2008 to April 2010. Details of the Judgment: Issue 1: Eligibility of Cenvat Credit on MS items as capital goods: - The Appellant procured various capital goods/equipments for use in the factory, duly accounted for. - Department observed ineligible credit on MS items used in manufacture of finished goods. - MS items used in building support structures lack nexus with the manufacturing process. - MS items, as permanent structures, do not qualify as capital goods under Rule 2(k) of CCR. - Various items like 3D marking machine, sand hoppers, steel hoppers, etc., are not classifiable as capital goods. - The Appellant argues that MS items are used for setting up machinery for manufacturing final products. - Chartered engineer certificates and photographs support the usage of MS items in machinery fabrication. - Cenvat Credit availed on MS items prior to 07.07.2009 and post that date is detailed. Issue 2: Application of the "user test" and retrospective effect of amendments: - The Larger Bench decision in Vandana Global Ltd. case denied credit on structural steel items used for support structures. - The amendment to Explanation-II to Rule 2(a) from 07-07-2009 was considered clarificatory. - The Apex Court's decision in CCE, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd. applied the "user test" to allow credit on steel plates and MS channels used for fabrication. - The decision in Mundra Ports & Special Economic Zone Ltd. case questioned the retrospective application of the 2009 amendment. - The Hon'ble Chhattisgarh and Madras High Courts' decisions supported the eligibility of Cenvat Credit on MS items used in machinery fabrication. Issue 3: Limitation period and disclosure of credit availed: - The Appellant asserts that the demand is time-barred as the credit availed was disclosed in returns and intimated to the jurisdictional office. - The reliance is placed on various decisions supporting the relevance of the date of receipt of goods for availing credit. Conclusion: - The Tribunal held in favor of the Appellant, allowing the Cenvat Credit on capital goods like EOT Cranes, 3D Marking Machine, etc., received in the factory. - Eligibility for Cenvat Credit is determined on the day goods are received, not based on subsequent use. - The appeal was allowed, and the Appellant entitled to consequential benefits.
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