2016 (9) TMI 1129 - AT - Central Excise

Cenvat credit - eligibility - inputs and capital goods i.e. steel, copper items used in fabricating support structures which is not included in the registered premises - structures emerging are not capital goods and or immovable civil constructions - Held that - we have carefully considered the nature of impugned items and their usage as elaborated in the chart submitted by the Chartered Engineer. It has been categorically submitted that the steel items have not been used for making support or civil structure or for making foundation. The copper tube, rod were used for making bus duct/bar of channels, copper earthing and for instrumental in the captive power plant. A perusal of the chart submitted by the respondent indicates that the findings in the impugned order is being challenged by the Revenue mainly on general assertions and case laws. As noted, there has been no attempt to independently verify the nature of various items and their ultimate usage in order ascertain the respondent s eligibility of credit on such items. The appeal is mainly on general principles and case laws without any specific material evidence to controvert the findings by the lower Authority. Taking into consideration the analysis made by the First Appellate Authority and the detailed chart submitted by the respondent regarding usage of impugned items, we find no merit in the present appeal by the Revenue. - Decided against the Revenue

Summary

Issues:
Eligibility of respondent for various credits for inputs and capital goods used in their captive power plant not included in registered premises.

Analysis:
The appeal was filed by Revenue against an order dated 22/2/2007 by Commissioner of Central Excise (Appeals), Raipur, concerning the eligibility of the respondent for credits on inputs and capital goods used in their captive power plant. The respondent, engaged in the manufacture of Ferro alloys, was availing credit under the Cenvat Credit Rules, 2004. Various show cause notices were issued demanding recovery of Cenvat credit totaling &8377; 1,98,66,239. The Original Authority disallowed credit of &8377; 67,61,510 and imposed a penalty of &8377; 7 lakhs on the respondent. On appeal, the Commissioner (Appeals) allowed the respondent's appeal in full, leading the Revenue to appeal before the Appellate Tribunal CESTAT NEW DELHI.

The main grounds contested by Revenue were related to the usage of copper rod, copper, and structural items in the construction of supporting structures. They argued that these items did not qualify for credit as they became immovable and lost their identity as excisable goods. Several legal precedents were cited to support this argument. Additionally, it was claimed that the final product, the power plant, was embedded to earth and categorized as civil construction/structure, making it ineligible for credit as inputs used in the manufacture of capital goods. Previous tribunal decisions were referenced to support this claim.

Upon review, the Tribunal found that the thrust of Revenue's appeal focused on the ineligibility of steel and copper items used in fabricating support structures for credit. However, after considering the detailed chart submitted by the Chartered Engineer, it was revealed that the steel items were not used for making support or civil structures but for specific purposes within the captive power plant. The chart indicated the specific usage of copper tube, rod, and other items, challenging Revenue's general assertions and legal references. The Tribunal noted that there was no independent verification of the nature and usage of the items by Revenue to contest the lower Authority's findings. As a result, the appeal was dismissed based on the detailed analysis provided by the First Appellate Authority and the lack of merit in Revenue's contentions.

In conclusion, the Appellate Tribunal CESTAT NEW DELHI upheld the decision of the Commissioner (Appeals) in favor of the respondent, dismissing Revenue's appeal on the grounds of insufficient evidence and lack of merit in challenging the eligibility of the respondent for credits on inputs and capital goods used in their captive power plant.