2018 (4) TMI 1148 - AT - Central Excise

CENVAT credit - input - iron and steel raw materials - Cement - period involved is from December 2007 to October 2008 and November 2008 to October 2009 - Held that - The definition of input has undergone an amendment with effect from 7.7.2009 - in various decision, the jurisdictional High Court and the Tribunal held that credit availed on MS items / iron and steel used for fabrication of capital goods or support structures is eligible for credit. The fact requires verification based on the evidence produced by the appellant - matter remanded to the adjudicating authority who shall analyse the issue afresh - appeal allowed by way of remand.

Summary

Issues:
Availment of CENVAT credit on iron and steel and cement for construction of a new cement plant, rejection of credit by the original authority, penalties imposed, interpretation of the definition of "input" pre and post amendment from 7.7.2009, eligibility of credit on MS items for fabrication of capital goods or support structures.

Analysis:

The appellants, engaged in manufacturing clinker and cement, availed CENVAT credit on iron and steel raw materials and cement for establishing a new cement plant. The original authority issued a show cause notice proposing to reject the credit on iron and steel and cement, leading to confirmation of the demand along with interest and imposition of penalties. The appellants challenged this before the Tribunal.

The consultant for the appellant argued that the credit was availed for construction of machinery equipment and support structures for capital goods, citing relevant judgments like India Cements and M/s. Thiru Arooran Sugars. The consultant also highlighted Tribunal orders setting aside penalties and remanding matters for reanalysis based on legal positions post the Vandana Global Ltd. judgment.

The respondent reiterated the findings in the impugned order during the hearing before the Tribunal. The Tribunal noted that the period involved in the appeal was pre and post the amendment to the definition of "input" from 7.7.2009. Citing the case of Mundra Ports & Special Economic Zone Ltd., the Tribunal analyzed the amendment and applicability of the Vandana Global Ltd. decision. It was observed that credit on MS items for fabrication of capital goods or support structures is eligible, subject to verification based on evidence produced by the appellant.

Consequently, the Tribunal remanded the matter to the adjudicating authority for fresh analysis considering the various decisions discussed. The Tribunal found the issue to be interpretational, setting aside the penalties in line with previous Tribunal decisions. The judgment concluded by remanding the matter for a fresh decision based on the legal positions discussed during the proceedings.