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2016 (11) TMI 229 - AT - Central ExciseDemand - Cenvat credit - Period of limitation - the plant and machinery and capital goods involved in the manufacture of cement/electricity are huge structures integrated into a particular plant and machinery to obtain desired results - Held that - Even to place the hoppers, in a particular manner, fabrications are required. Without such fabrication, the hoppers cannot be put into use. Here, it is not tenable to hold that the various iron and steel angles, channels, etc. used in conjunction with hoppers, are pure civil structures and cannot be considered as accessories or components of such hoppers. Such argument will be factually and legally devoid of merits. There could be no justification for invoking demand for the extended period as there could be no ground for alleged suppression, fraud, collusion or willful mis-statement in availing the credit on these items by the appellants - Appeal allowed.
Issues:
- Eligibility of cenvat credit on iron and steel items used in the setting up of expansion project of Cement Plant and Captive Thermal Power Plant. - Interpretation of whether iron and steel items used in the creation of immovable property are eligible for cenvat credit. - Applicability of Rule 2(k) amendment retrospectively. - Application of user test to determine the eligibility of cenvat credit on steel items. - Time bar for invoking extended period demand. Analysis: 1. Eligibility of Cenvat Credit on Iron and Steel Items: The appellants availed cenvat credit on iron and steel items used in setting up an expansion project of Cement Plant and Captive Thermal Power Plant. The Original Authority denied the credit, arguing that these items were used in the creation of immovable property and were not excisable goods. The Tribunal considered the usage of these items and found that they were integral to the manufacturing process of final products, such as hoppers and support structures for machinery. The Tribunal concluded that these items were not mere civil structures but essential components contributing to the manufacturing process, making the appellants eligible for cenvat credit. 2. Interpretation of Immovable Property for Cenvat Credit: The lower authority contended that iron and steel items used in the creation of immovable property are not eligible for cenvat credit. However, the Tribunal differentiated between civil structures and items integral to machinery and capital goods, ruling that the latter are eligible for credit. The Tribunal emphasized that the actual use of steel items determines their eligibility, citing previous judgments where similar items were allowed credit based on the user test. 3. Applicability of Rule 2(k) Amendment: The appellants argued that the Rule 2(k) amendment was not applicable retrospectively, contrary to the Tribunal's view. They relied on a judgment by the Hon'ble Gujarat High Court to support their contention. The Tribunal considered this argument but ultimately focused on the user test and the nature of the items to determine credit eligibility, rather than solely relying on the retrospective application of the amendment. 4. User Test Application for Cenvat Credit: The Tribunal extensively discussed the application of the user test to determine the eligibility of cenvat credit on steel items. Citing various judgments, including a recent decision, the Tribunal concluded that structural steel items used in the fabrication of support structures for capital goods qualify as components of relevant machinery. By applying the user test, the Tribunal upheld the appellants' eligibility for cenvat credit on these items. 5. Time Bar for Extended Period Demand: Regarding the time bar for invoking extended period demand, the Tribunal noted that the issue of cenvat credit eligibility on M.S. Items had been a subject of long dispute with conflicting decisions from various courts. The Tribunal found no justification for invoking the extended period demand, as there was no evidence of suppression, fraud, collusion, or willful misstatement by the appellants. Therefore, the demand was deemed unsustainable on the grounds of time bar. In conclusion, the Tribunal set aside the impugned order, allowing the appeal and pronouncing the judgment in favor of the appellants on 21.10.2016.
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