2014 (10) TMI 55 - AT - Central Excise

Denial of CENVAT Credit - Bogus invoices - Held that - When the show cause notice itself accepts that certain quantity of steel items have been used for the repair of the mining machinery, the cenvat credit in respect of at-least that much quantity cannot be denied. Moreover, the appellant s claim backed by the certificate issued by their Chartered Engineer is that entire quantity of the iron and steel items have been used for the repair and maintenance purpose either of the machinery installed in the mines or in the factory but this certificate has not been considered by the lower authorities. The impugned order is vague without giving any specific finding about the user of the steel items in question. In view of this, the impugned order is set aside and the matter is remanded to the original adjudicating authority for de novo adjudication - Decided in favour of assessee.

Summary

Issues:
- Eligibility of cenvat credit on steel items used in mines for repair and maintenance.

Analysis:
The appellant took cenvat credit for steel items used in mines for repair and maintenance. The department contended that these items were not eligible for credit as they were used for purposes like repairing mining machinery or supporting conveyor systems, which were not covered under the definition of 'inputs' or 'capital goods'. A show cause notice was issued, leading to an order confirming the cenvat credit demand without imposing a penalty. The appellant argued that all steel items were used for repair and maintenance, not for the disputed purposes. They provided a certificate from a Chartered Engineer to support their claim, which was not considered by the authorities.

On appeal, the Commissioner (Appeals) upheld the order, prompting the present appeal. The appellant reiterated that the steel items were solely used for repair and maintenance, not for the purposes mentioned in the notice. The department defended the order by citing a judgment regarding the ineligibility of steel items used for mine roof support. The Tribunal considered both sides' arguments and the records.

The Tribunal noted that the show cause notice acknowledged some steel items were used for repairing mining machinery, which should make them eligible for cenvat credit. The appellant's claim, supported by the Chartered Engineer's certificate, stated that all steel items were used for repair and maintenance, but this was not addressed in the previous order. Referring to relevant judgments, the Tribunal set aside the previous order and remanded the matter for fresh adjudication. The authorities were directed to consider the appellant's contentions and the applicable legal precedents. The appellant was given the opportunity to present additional evidence regarding the steel items' usage. The appeal was disposed of accordingly.