2016 (6) TMI 274 - AT - Central Excise

Cenvat credit on material like cement, angles, channels, electrodes, CTD Bars and H.R. Plates. Ld. - denial of claim on the ground that all these materials are for general purpose, structural items used for carrying out civil engineering work and therefore could not be treated as accessories of machines installed in the factory - extended period of limitation invoked - Held that - In the present case channel, angles, H.R. Plates, welding electrodes were used for fabrication/manufacture of parts or furnace which is capital goods, credit on these items are admissible. As regard credit on cement and CTD Bars, these items were neither used as capital goods nor as input for manufacture of Capital goods for the reason that Cement and CTD bars were admittedly used for making civil structure i.e. foundation for erection or installation of furnace. Though it is made for erection or installation of machinery but it is civil construction like building construction therefore credit on CTD bar and cement is not admissible. As regard limitation in respect of credit taken on CTD bars and Cement, since appellant have not disclosed the fact about use of these material to the department, it amounts to suppression of facts therefore the extended period is rightly invoked. In case of Commissioner of Customs and Central Excise, Ghaziabad Vs. M/s. Rathi Steel and Power Ltd 2015 (5) TMI 168 - ALLAHABAD HIGH COURT held that there is willful suppression of material fact by the assessee as well as contravention of the provisions of the Act and rules. The fact of the said judgment are more or less similar to the facts of the present case therefore Ld. lower authority rightly invoked the extended period. Hence the demand of Cenvat credit in respect of CTD bars and Cement is sustainable. In view of the above the credit in respect of Channal, Angles, HR Plates, welding Electrodes are allowed. Credit on CTD bars and Cement is disallowed. Adjudicating authority shall re-quantify the demand and penalty and interest commensurate to re-quantified amount of demand. - Decided in favour of assessee in part.

Summary

Issues:
- Entitlement to Cenvat credit for various materials like cement, angles, channels, electrodes, CTD Bars, and H.R. Plates.
- Denial of Cenvat credit by lower authorities on the grounds of general purpose use and suppression of facts.

Analysis:
1. The appeals questioned the entitlement to Cenvat credit for materials used in production. The lower authorities denied the credit, citing the general purpose nature of the materials and their use in civil engineering work. They also alleged suppression of facts by the appellant.

2. The appellant argued that the materials were integral parts of capital goods used in production. They referenced previous orders where credit was allowed on similar items. The appellant contended that the use of these materials was essential for the production process, relying on various judgments to support their claim.

3. The Revenue representative reiterated the lower authorities' findings, stating that the materials were either construction-related or structural steel. They cited precedents where steel items for structural support were not considered inputs or capital goods.

4. Upon review, the Tribunal found that certain materials like channels, angles, H.R. Plates, and welding electrodes were indeed used in manufacturing machinery parts, justifying the allowance of Cenvat credit. However, for materials like cement and CTD Bars used in civil construction, credit was deemed inadmissible. The Tribunal also upheld the invocation of the extended period due to the appellant's failure to disclose material facts.

5. The Tribunal's decision aligned with the Supreme Court's stance on allowing credit for materials used in the fabrication of capital goods. The judgment differentiated between materials used in machinery production and civil construction, affirming the admissibility of credit based on the specific utilization of the materials. The Tribunal upheld the demand for Cenvat credit on certain items while disallowing it on others, emphasizing the importance of proper disclosure to avoid the invocation of the extended period.