2024 (10) TMI 1540 - AT - Central Excise

CENVAT Credit - inputs/capital goods - dumpers falling under Chapter 87 of the Central Excise Tariff Act, 1985 - Extended period of limitation - HELD THAT - It is not in dispute that the appellant had accounted the said dumpers under the head Fixed Assets in their balance sheet and have claimed depreciation on the same, thus declaring the dumpers as capital goods and hence, they cannot be construed as inputs under the Cenvat Credit Rules, 2004. The dumpers which are classifiable under Chapter 87 of the Central Excise Tariff Act, 1985 are clearly excluded from the definition of Capital Goods . Therefore, appellant is not eligible for the benefit of cenvat credit on the dumpers which are used in the mining area away from the factory premises either as inputs or capital goods. Whether the appellant is eligible for the benefit of cenvat credit on the dumpers as Capital Goods ? - HELD THAT - In view of the definition of the Capital Goods , the appellant is clearly not eligible for the benefit of the cenvat credit treating the dumpers as Capital Goods . The decisions of M/S. ADITYA CEMENT VERSUS CCE, JAIPUR-II 2016 (9) TMI 1127 - CESTAT NEW DELHI and BHARATHI CEMENT CORPORATION PVT LTD. VERSUS COMMISSIONER OF CENTRAL TAX, TIRUPATI GST 2022 (9) TMI 850 - CESTAT HYDERABAD is not relevant in view of the fact that the appellant himself has considered the dumpers as capital goods and they have also admittedly claimed depreciation on these assets. The decision in the case of VIKRAM CEMENT VERSUS CCE, INDORE 2006 (2) TMI 1 - SUPREME COURT is also not applicable since the mines where the dumpers are used are not captive mines. Thus, the dumpers are not eligible for cenvat credit neither as inputs nor as capital goods. Extended period of limitation - HELD THAT - The original authority in the impugned order has only stated that the appellant after realising that they were not eligible for credit on dumpers as capital goods, they availed cenvat credit on the same declaring them as inputs and this itself is a deliberate act with an intent to avail irregular cenvat credit. The Commissioner (Appeals) in the impugned order has not given any finding with regard to limitation. Neither the show cause notice nor the impugned orders have specified any factors to confirm suppression or misstatement of facts to invoke the extended period of limitation - unless there are specific allegations or averments for wilful mis-statement or suppression of facts, the demand cannot be sustained for the extended period. Therefore, the entire demand being beyond the normal period the same is set aside. Appeal allowed.

Summary

Issues Involved:

1. Eligibility of dumpers for Cenvat credit as inputs or capital goods under the Cenvat Credit Rules, 2004.
2. Applicability of the extended period of limitation for demanding duty.

Detailed Analysis:

1. Eligibility of Dumpers for Cenvat Credit:

The central issue in this case was whether dumpers used by the appellant for transporting raw materials from mines to the factory premises qualify for Cenvat credit as inputs or capital goods under the Cenvat Credit Rules, 2004. The appellant argued that dumpers are essential for the integrated process of manufacturing cement and clinker, thus qualifying as accessories to the main plant equipment, and therefore should be eligible for Cenvat credit. The appellant cited several precedents, including the apex court decision in Vikram Cements, to support their claim that credit on capital goods is admissible when used in an integrated manufacturing process.

Conversely, the Revenue contended that under the Cenvat Credit Rules, 2004, dumpers do not qualify as inputs or capital goods. The rules explicitly exclude motor vehicles from the definition of capital goods, and since dumpers are classified under Chapter 87 of the Central Excise Tariff Act, 1985, they are not eligible for credit. The Revenue relied on the decision in Devi Iron & Power Pvt. Ltd., which held that tipper chassis, being accessories of motor vehicles, cannot be considered inputs.

Upon examining the definitions provided in the Cenvat Credit Rules, the Tribunal found that dumpers do not meet the criteria for inputs as they are not used within the factory premises nor directly in the manufacture of final products. Additionally, since the appellant accounted for dumpers as fixed assets and claimed depreciation, they were treated as capital goods, which are also excluded from Cenvat credit under the relevant rules. The Tribunal concluded that dumpers, being classifiable under Chapter 87, are not eligible for Cenvat credit either as inputs or capital goods.

2. Applicability of the Extended Period of Limitation:

The appellant challenged the invocation of the extended period of limitation for demanding duty, arguing that they acted in good faith based on the decision in Vikram Cement and had regularly declared the credit on dumpers in their ER-1 returns without any initial objections from the department. The show cause notice was issued only after an audit in 2009, alleging suppression of facts without evidence.

The Tribunal referred to the Supreme Court's decision in Uniworth Textiles Ltd. v. Commissioner of Central Excise, which emphasized that the burden of proving mala fide conduct lies with the Revenue. The show cause notice must explicitly allege fraud, collusion, or willful misstatement to justify the extended limitation period. In this case, the Tribunal found no specific allegations or evidence of suppression or misstatement by the appellant, rendering the invocation of the extended period unsustainable.

Conclusion:

The Tribunal held that the dumpers are not eligible for Cenvat credit as inputs or capital goods under the Cenvat Credit Rules, 2004. However, the demand for duty was set aside as it was raised beyond the normal limitation period without sufficient grounds for invoking the extended period. Consequently, the appeal was allowed.