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2017 (4) TMI 795 - AT - Central ExciseCENVAT credit - MS items - denial on the ground that the MS items do not fall within the definition of capital goods - Held that - it is seen from the certificate that the MS items have been used for fabrication of capital goods their parts/components/accessories thereof and also support structures for erection of the capital goods. The only ground on which the department has sought to deny the credit is on the basis of the judgment in the case of Vandana Global Ltd. 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) wherein it was held that the amendment dated 07.07.2009 which restricted the use of M.S items is applicable retrospectively. It is the contention of department that after fabrication of the support structures including platform when embedded to earth become immovable property and therefore not being excisable goods the MS items are not eligible for credit. The judgment rendered in Vandana Global Limited has been analysed by the Hon ble High Court of Andhra Pradesh in the case of Mundra Ports and SEZ Ltd, 2015 (5) TMI 663 - GUJARAT HIGH COURT . The Hon ble Court observed that the amendment dated 07.07.2009 brought forth to the definition of inputs does not have retrospective application. In the present case the period involved is prior to 07.07.2009 - credit allowed - decided in avor of assessee.
Issues:
1. Eligibility of CENVAT credit on MS items used for fabrication of capital goods. 2. Interpretation of the definition of capital goods. 3. Retrospective application of amendments restricting the use of MS items. 4. Analysis of relevant case laws regarding credit on MS items. Analysis: Issue 1: Eligibility of CENVAT credit on MS items used for fabrication of capital goods The case involved the appellant availing CENVAT credit on MS plates, channels, Joists, Angles, Beams, HR Coils for the period of April 2004 to March 2008. The department contended that the credit availed on MS items is not eligible under the category of capital goods. The appellant argued that the MS items were used for fabrication of various capital goods like Pollution Control Equipments, platform for plant and machinery, and support structures, which are essential for the functioning of capital goods. The appellant provided a Chartered Accountant Certificate to establish the use of MS items in the factory for fabrication of capital goods. Issue 2: Interpretation of the definition of capital goods The department argued that MS items do not fall within the definition of capital goods, hence the credit was rightly disallowed. However, the appellant maintained that the support structures made of MS items form an integral part of capital goods and are essential for the functioning of machinery. The appellant submitted detailed records and certificates to demonstrate the use of MS items for fabrication of capital goods, highlighting the importance of support structures for the erection and operation of capital goods. Issue 3: Retrospective application of amendments restricting the use of MS items The department relied on a judgment to deny credit based on an amendment restricting the use of MS items introduced after the period in question. The appellant argued that the said amendment does not have retrospective application and cited relevant case laws where similar issues were analyzed. The appellant contended that the period involved in this case is prior to the introduction of the restrictive amendment, making the credit eligible as per the prevailing regulations during that time. Issue 4: Analysis of relevant case laws regarding credit on MS items The judgment referred to various case laws where the eligibility of credit on MS items used for fabrication of capital goods was analyzed. The appellant cited cases where courts ruled in favor of the assessee, emphasizing the importance of support structures and components made of MS items for the functioning of capital goods. The Tribunal, following the precedents set by the High Courts in similar cases, held that the disallowance of credit on MS items in this case was unjustified and allowed the appeal with consequential reliefs. In conclusion, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal regarding the eligibility of CENVAT credit on MS items used for fabrication of capital goods, based on the detailed submissions, records, and relevant legal interpretations provided during the proceedings.
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