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2016 (11) TMI 685 - AT - Central ExciseCENVAT Credit - inputs and capital goods - irregular availment of credit on MS beams, angles, channels etc - Held that - The major part of the credit falls prior to 07.07.2009 and the department has relied upon the decision laid in M/s Vandana Global Ltd. 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) , case to hold that the credit is not eligible. On perusal of the records it is seen that the subject items are used for fabrication of support structures conveyer system, hoppers, silos, railway sidings etc. It is not disputed that without these support structures and such other capital goods fabricated using the MS items, the process of manufacture cannot be carried out effectively by the appellant. It has to be stated that on introduction of explanation in the definition of inputs after 07.07.2009 the restriction is only when the MS items are used for construction of shed, laying of foundation etc. Extended period of limitation - Held that - the appellants have filed ER-1 returns regularly, the extended period is not invokable as the issue is a contentious one. Disallowance of credit is unjustified - appeal allowed.
Issues:
1. Eligibility of CENVAT Credit on MS items used for fabrication. 2. Applicability of limitation period for the disputed amount. 3. Denial of credit based on invoices in the name of contractors. 4. Invocation of extended period for demand due to suppression of facts. Issue 1: The main issue in this case was the eligibility of CENVAT Credit on MS items used for fabrication of support structures and capital goods by the appellants. The department relied on the decision in M/s Vandana Global Ltd., case to deny the credit. However, the Tribunal considered various judgments, including the one in the case of Rajasthan Spinning & Weaving Mills Ltd, and held that credit is admissible on MS items used for erection of capital goods essential for the manufacturing process. The Tribunal also referred to the amendment in Rule 2(k) of CENVAT Credit Rules, 2004, and concluded that denial of credit was unjustified, ultimately allowing the appeal. Issue 2: Regarding the limitation period for the disputed amount, the appellant argued that a significant portion of the amount was barred by limitation, with specific amounts relating to periods before and after 07.07.2009. The Tribunal considered the appellant's submission and found that the demand for the period before the mentioned date was indeed time-barred. The Tribunal also analyzed a similar case involving extended period invocation and ruled in favor of the appellant, emphasizing the strict interpretation of "suppression" for invoking the extended period. Issue 3: The denial of credit based on invoices in the name of contractors was also contested by the appellant. The appellant pointed out that the invoices contained the appellant's registration number and address, along with a certificate from the contractor confirming non-availment of credit on the items. The Tribunal agreed with the appellant, stating that the presence of the appellant's details on the invoices, coupled with no dispute regarding duty payment, was insufficient grounds to deny the credit. Issue 4: The last issue revolved around the invocation of the extended period for demand due to alleged suppression of facts. The Tribunal referred to various Supreme Court judgments emphasizing the need for deliberate suppression or positive acts of concealment to justify invoking the extended period. In this case, the Tribunal found that the demand for the extended period was not sustainable, especially considering the regular filing of ER-1 returns by the appellants and the lack of scrutiny by the department for an extended period. Consequently, the disallowance of credit was deemed unjustified, and the appeal was allowed with consequential reliefs. In conclusion, the judgment by the Appellate Tribunal CESTAT Hyderabad addressed multiple issues related to the eligibility of CENVAT Credit, limitation periods, denial of credit based on invoices, and the invocation of extended periods for demand, providing detailed analysis and legal interpretations to support the final decision in favor of the appellant.
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