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2024 (8) TMI 395 - AT - Service TaxCENVAT Credit on the capital goods was denied - levy of penalty - credit denied to the assessee solely for the reason that availment of CENVAT Credit on such goods is restricted to works contractor who installs such goods in the assessee s premises - HELD THAT - It is observed that the capital goods have been procured by the appellant/Tata under a separate contract, on payment, which has become the property of the appellant and the same has been handed over by Tata to L T for installation and commissioning. L T paid Service Tax on the said activity without taking CENVAT Credit on inputs used in providing the said service. In these circumstances, the goods remain the property of the appellant namely, Tata during the impugned period. The appellant-Tata has correctly taken CENVAT Credit on the capital goods procured by them which have been ultimately used in the manufacture of final products. In these circumstances, the denial of CENVAT Credit is not sustainable. Penalty - HELD THAT - As the appellant-Tata has taken CENVAT Credit correctly, it is held that no penalty is imposable on the appellants. Consequently, the penalties imposed on all the appellants is set aside. The impugned order is set aside - Appeal allowed.
Issues:
Entitlement to CENVAT Credit on capital goods. Analysis: The case involved the appellant, a company engaged in the production of iron ore concentrate and fines, commissioning a new material handling system through various contracts with another company, L&T. The Revenue alleged denial of CENVAT Credit on capital goods supplied by L&T, as L&T opted for service tax payment under a works contract service where CENVAT Credit on inputs was restricted. The impugned order denied the CENVAT Credit and imposed penalties, leading to the appeal. The appellant argued that denial of CENVAT Credit solely due to works contractor restrictions was not valid, citing precedents like Commissioner of C.Ex. v. Gujrat Ambuja Cement Ltd. affirmed by the Supreme Court. They also referenced cases like Commissioner, Central Excise & CGST, Udaipur v. Rajasthan Spinning & Weaving Mills Ltd. and Commissioner of C.Ex. & CGST, Udaipur v. Hindustan Zinc Ltd. to support their stance. The appellant contended that the extended period of limitation was not applicable. In contrast, the Revenue supported the impugned order during the hearing. The Tribunal examined whether the appellants were entitled to CENVAT Credit on capital goods. It was noted that the goods procured by the appellant became their property and were handed over to L&T for installation and commissioning. L&T paid Service Tax without availing CENVAT Credit on inputs, indicating the goods remained the appellant's property during the relevant period. The Tribunal referred to the case of Commissioner of C.Ex. v. Gujrat Ambuja Cement Ltd. and the Tribunal's decision in Rajasthan Spinning & Weaving Mills Ltd., highlighting that the installed capital goods were used in manufacturing the final product. Additionally, the case of Commissioner of C.Ex., Jalandhar v. International Tractor Ltd. was cited, affirming the entitlement to modvat credit for duty-paid inputs and parts. Consequently, the Tribunal held that the appellant correctly availed CENVAT Credit on capital goods, leading to the setting aside of penalties imposed on the appellants. In conclusion, the impugned order was set aside, and the appeals were allowed with any consequential relief.
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