2018 (2) TMI 361 - AT - Central Excise

CENVAT credit - air conditioners, which is installed in the Control Panel room of the factory - items being PVC Pipe, PVC End Cap, PVC Elbow/Tap, Black Steel Tubes, M. S. Tubes, Galvanized Steel Tubes, M. S. Tubes Welded, M. S. Beam, etc. - Held that - tubes and pipes and fittings thereof which are the items under dispute are specifically mentioned in the list of capital goods in Rule 2(a)(A)(vi) of CCR 2004 - admittedly the goods have been used in the factory of production - Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Availing Cenvat credit on air conditioners and various items like PVC Pipe, PVC End Cap, etc.
2. Disallowance of Cenvat credit under Rule 14 of Cenvat Credit Rules, 2004.
3. Imposition of penalty under Rule 15(2) of Cenvat Credit Rules, 2004.
4. Interpretation of the definition of capital goods and inputs under Rule 2(a)(vi) and Rule 2(k) of Cenvat Credit Rules, 2004.
5. Dispute regarding the usage of pipes and fittings in the factory of production.
6. Appeal against the decision of the Commissioner (Appeals) regarding disallowance of Cenvat credit and penalty.

Analysis:

1. The appeals were filed against the Order-in-Original (OIA) passed by the Commissioner of Central Excise & Service Tax regarding the availing of Cenvat credit on air conditioners and various items. The issue revolved around whether the appellant correctly availed Cenvat credit on these items. The appellant, engaged in the manufacture of V. P. Sugar & Molasses, faced allegations of non-compliance with Cenvat Credit Rules. The Revenue proposed disallowance of Cenvat credit and penalties under Rule 14 of the Cenvat Credit Rules, 2004, and Section 11A of the Central Excise Act, 1944.

2. The Commissioner (Appeals) confirmed the proposed demand and penalties but allowed Cenvat credit on air conditioners while upholding the disallowance on other items. The Commissioner noted the absence of fraud or negligence in the appellant's case and set aside the penalties. The Tribunal considered the definition of capital goods and inputs under the Cenvat Credit Rules, 2004, emphasizing the proper utilization of goods in the factory of production to avail Cenvat credit.

3. The Revenue contested the deletion of penalties by the Commissioner (Appeals) citing the appellant's failure to provide detailed information in ER-I/Cenvat returns regarding the availed Cenvat credit. However, the Tribunal observed that the disputed items, including tubes and pipes, were listed as capital goods and were used in the factory of production, making the appellant eligible for Cenvat credit under the relevant rules.

4. The Tribunal allowed the appeal by the assessee, setting aside the disallowance of Cenvat credit. The judgment highlighted the permissible usage of iron and steel in structures for Plant & Machinery based on a ruling by the Hon'ble Madras High Court. Consequently, the appeal filed by the Revenue was dismissed, while the appellant's appeal was allowed with consequential relief, in accordance with the law.