2017 (11) TMI 20 - AT - Central Excise

CENVAT credit - capital goods installed in the sister unit - Held that - Denial of CENVAT credit on the Central Excise duty paid on the capital goods, in this case, seems to be totally unsustainable as both the lower authorities have not disputed the factual matrix that appellant had installed the capital goods in their own units at different places and was getting the goods job worked form such units and receiving it back and dispatched the same on payment of duty - demand set aside. CENVAT credit - outward transportation of the goods under GTA service - Held that - the period during which the appellant availed CENVAT credit is September 2007 to March 2008 - the issue is now covered by the judgment of the Hon ble High Court of Karnataka in the case of Commissioner LTU, Bangalore Vs. ABB & Others 2011 (3) TMI 248 - KARNATAKA HIGH COURT , where it was held that Credit of service tax paid on outward transportation allowed prior to 1.4.2008 - demand set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of CENVAT credit for capital goods installed in sister concern's premises.
2. Correctness of CENVAT credit on service tax for outward transportation under GTA service.

Analysis:
Issue 1:
The appellant sought guidance from the Assistant Commissioner and the Commissioner of Central Excise regarding the procedure for installing capital goods in their sister concern's premises for manufacturing. Despite not receiving a positive response, the appellant proceeded with the installation and job working of goods. The audit raised objections to the CENVAT credit availed, leading to a show-cause notice and subsequent penalties imposed by the adjudicating authority. The first appellate authority also upheld the demands. However, the Tribunal found the denial of CENVAT credit on capital goods unsustainable, as the factual matrix confirmed that the goods were installed in the appellant's own units for manufacturing purposes. Referring to the case law of Sri Eswari Auto Components (P) Ltd. Vs. CCE, Chennai-IV, the Tribunal set aside the confirmation of demand, interest, penalty, and confiscation of capital goods, ruling in favor of the appellant.

Issue 2:
Regarding the second issue of availing CENVAT credit on service tax paid for outward transportation of goods, the period in question was from September 2007 to March 2008. Citing the judgment of the Hon'ble High Court of Karnataka in Commissioner LTU, Bangalore Vs. ABB & Others, the Tribunal set aside the confirmation of demand on this point as well. Consequently, the impugned orders were set aside, and the appeals were allowed based on the judgments provided and the factual circumstances presented during the proceedings.