2014 (4) TMI 264 - AT - Central Excise

Waiver of pre deposit - CENVAT Credit - Capital goods - user of cement and steel in constructing foundation for a captive power plant - Held that - issue has been decided not only by Larger Bench of the Tribunal in Vandana Global Ltd. (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)) but also by the Hon ble Apex Court in the case of Saraswati Sugar Mills Vs CCE Delhi - 2011 (8) TMI 4 - SUPREME COURT OF INDIA . He also points out that the decision of Madras High Court in India Cements (2011 (8) TMI 399 - MADRAS HIGH COURT) was with reference to steel items which has gone into fabrication of specified machinery or parts of machinery and not for supporting structure. - since the issue has even been decided by Larger Bench and the Hon Apex Court against the appellant, it is proper to call for pre-deposit of entire amount of duty for admission of appeal. - stay granted in respect of interest portion only.

Issues:
1. Eligibility of Cenvat credit on cement and steel used in constructing a power plant foundation during 2007-08.
2. Applicability of the judgement in Vandana Global Ltd. case and the amendment to the definition of 'input' in Rule 2(k) of CCR 04.
3. Comparison of decisions in CCE Trichy Vs India Cements Ltd. and Saraswati Sugar Mills Vs CCE Delhi regarding Cenvat credit for steel items.
4. Requirement of pre-deposit for admission of appeal against the order confirming liability along with interest and penalties.

Analysis:
1. The applicant, a cement manufacturer, used cement and steel in constructing a power plant foundation during 2007-08 and claimed Cenvat credit on these materials. However, a show cause notice was issued by the Revenue in March 2009, challenging the eligibility of such materials as capital goods. Following adjudication, an amount of Rs.13,29,994/- was confirmed against the applicant, including interest and penalties. The Commissioner (Appeals) set aside the penalty but upheld the rest of the order, leading the applicant to file an appeal before the Tribunal along with a stay petition.

2. The advocate for the applicant argued that the judgement in Vandana Global Ltd. case should not be considered valid, and denial of Cenvat credit on cement and steel should only apply from 7.7.09, post the amendment to the definition of 'input' in Rule 2(k) of CCR 04. He cited the case of CCE Trichy Vs India Cements Ltd., where the Madras High Court allowed Cenvat credit for steel items, emphasizing the disputable nature of the matter and requesting admission of the appeal without pre-deposit.

3. In opposition, the Revenue's representative contended that both the Larger Bench of the Tribunal in Vandana Global Ltd. case and the Hon'ble Apex Court in Saraswati Sugar Mills case had ruled against the appellant regarding the eligibility of Cenvat credit on cement and steel. Additionally, the decision of the Madras High Court in India Cements case was specific to steel items incorporated into machinery or parts of machinery, not for supporting structures like in the present case. The High Court had deemed those steel items as part of the machinery.

4. After considering the arguments, the Tribunal directed the applicant to pre-deposit the entire amount of duty, i.e., Rs.13,29,994/- within six weeks for the admission of the appeal. While the pre-deposit of interest was waived, its collection was stayed during the pendency of the appeal. Compliance with this order was required to be reported by a specified date.

This detailed analysis covers the issues of eligibility for Cenvat credit, the impact of relevant judgments, and the requirement of pre-deposit for appealing the order confirming the liability on the applicant.

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