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2018 (1) TMI 206 - AT - Central ExciseCENVAT credit - steel and cement - whether the appellants are entitled to the CENVAT credit availed on steel and cement used in the manufacture of capital goods? - Held that - the learned Commissioner (A) in para 9 of the impugned order has wrongly observed that the appellants have not produced any certificate from the Chartered Engineer which shows the use of cement and iron and steel items received in the factory of the appellant - the appellant produced the Chartered Engineer certificate along with his reply to the show-cause notice and this fact has been recorded in the Order-in-Original. On identical issue, this Tribunal in the case of Ultratech Cement Ltd. 2017 (6) TMI 796 - CESTAT BANGALORE has allowed the CENVAT credit on identical items used for manufacture of capital goods. Credit allowed - appeal allowed - decided in favor of appellant.
Issues:
- Appeal against rejection of appeals by Commissioner (A) and upholding of Orders-in-Original - Admissibility of CENVAT credit on steel and cement used in the manufacture of capital goods Analysis: The appellants filed two appeals against the common impugned order rejecting their appeals and upholding the Orders-in-Original by the Commissioner (A). The issue in both appeals was identical, so they were disposed of together. The appellants, holders of Central Excise Registration for Sugar and Molasses, availed Cenvat credit on certain items not specified as capital goods under Rule 2(a) of the Cenvat Credit Rules, 2004. The irregular CENVAT credit amounting to Rs. 42,47,433/- and Rs. 34,04,067/- was observed during specific periods. Show-cause notices were issued, and after due process, the demand was confirmed along with penalties. The appellants contended that the impugned order did not consider their submissions and relied on precedents allowing credit on similar items used in the manufacture of capital goods. The appellant's counsel argued that steel and cement used in manufacturing capital goods qualify as inputs under Rule 2(k) and cited various decisions supporting their claim. They also challenged the reliance on specific precedents by the Commissioner (A) and the amendment to Rule 2(k). The counsel presented evidence of usage through a Chartered Engineer certificate and an affidavit from the Works Manager. The AR defended the impugned order, stating the items in question did not meet the criteria for capital goods and were excluded from credit eligibility post-amendment. The AR argued that even before the amendment, credit on steel was not admissible and that certain structures were not considered capital goods. After hearing both parties and reviewing the records, it was found that the key issue was the entitlement to CENVAT credit on steel and cement used in manufacturing capital goods. The Commissioner (A) incorrectly stated that no certificate from a Chartered Engineer was produced, whereas evidence was submitted and recorded in the Order-in-Original. Precedents and the Karnataka High Court decision supported the classification of storage tanks as capital goods. The Tribunal's past rulings allowed credit on similar items for capital goods manufacturing. The objection that capital goods became immovable property was dismissed based on legal precedents. Considering all relevant decisions, the impugned order denying CENVAT credit on cement, steel, and iron was deemed unsustainable, leading to the allowance of both appeals with consequential relief. The judgment was pronounced on 01/01/2018 by S.S. Garg, Judicial Member of the Appellate Tribunal CESTAT Bangalore.
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