2024 (8) TMI 710 - AT - Central Excise

CENVAT Credit - inputs - MS Angles, Channels, Plates etc. which have been used for fabrication of capital goods - HELD THAT - It is found from the records that the Appellant has produced copy of the Chartered Engineer s Certificate showing in detail as to how the input has been used in fabrication of various capital goods within the factory premises. Inspite of such detailed evidence produced, the lower authorities have not given proper consideration and confirmed the demand - the issue is no more res integra. The Hon ble Madras High Court in the case of M/S. THIRU AROORAN SUGARS, M/S. DALMIA CEMENTS (BHARAT) LTD. VERSUS CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, THE COMMISSIONER OF CENTRAL EXCISE 2017 (7) TMI 524 - MADRAS HIGH COURT has held ' Therefore, in our opinion, whether the user test is applied, or the test that they are the integral part of the capital goods is applied, the assessees, in these cases, should get the benefit of Cenvat credit, as they fall within the scope and ambit of both Rule 2(a)(A) and 2(k) of the 2004 Rules.' The Appeal is allowed both on merits as well as on account of limitation - appeal allowed.

Summary

Issues:
1. Cenvat credit on MS Angles, Channels, Plates used for fabrication of capital goods
2. Allegation of suppression and invoking extended period provisions
3. Consideration of case laws regarding Cenvat credit denial
4. Time limit for invoking extended period provisions
5. Interpretation of "suppression of fact" for penalty imposition

Analysis:

The judgment by the Appellate Tribunal CESTAT KOLKATA involved the issue of Cenvat credit on MS Angles, Channels, Plates used for the fabrication of capital goods. The Appellant had taken the credit, but a Show Cause Notice was issued demanding the credit taken on such inputs. The lower authorities confirmed the demand, leading to the appeal. The Appellant argued that the inputs were used in the fabrication of capital goods for the manufacture of dutiable goods, supported by a detailed Certificate from a Chartered Engineer. They contended that previous decisions supported their claim that Cenvat Credit cannot be denied in such cases. The Appellant also highlighted the time frame of the Show Cause Notice and their belief in the correctness of the credit taken, citing relevant case law (CCE, Raipur Vs. Rajaram Maize Products-2010).

The Appellate Tribunal noted the evidence provided by the Appellant, including the Chartered Engineer's Certificate detailing the usage of inputs in the factory premises for fabrication. Despite the evidence, the lower authorities did not give proper consideration to the Appellant's case. The Tribunal referred to judgments such as Thiru Arooram Sugars Vs. CESTAT, Chennai and Vandana Global Ltd. Vs. Commissioner of C. Ex. & Cus., Raipur, emphasizing the benefit of Cenvat credit for inputs integral to capital goods. The Tribunal also considered the time limitation aspect, referring to the Madras High Court judgment in Commissioner of Central Excise, Salem Vs. Madras Aluminum Co. Ltd., which discussed the interpretation of "suppression of fact" for penalty imposition under Section 11AC.

Based on the legal principles established in the referenced case laws, the Tribunal allowed the appeal both on merits and due to the limitation issue. The Appellant was deemed eligible for consequential relief as per the law. The judgment highlighted the importance of considering the integral use of inputs in capital goods for claiming Cenvat credit and the necessity of proving wilful intent to evade duty for penalty imposition. The decision provided a comprehensive analysis of the issues raised and applied relevant legal precedents to reach a favorable outcome for the Appellant.