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2018 (5) TMI 305 - HC - Central ExciseEffect of amendment to Cenvat Credit Rules - retrospective or prospective - inputs used in capital goods embedded to earth - as the amendment brought in CENVAT Credit Rules 2004 as per Rule 2 of the CENVAT (Amendment) Rules 2009 retrospective in nature considering is it clarificatory to be applied to all matters which arise before 07.07.2009, the date of commencement of the CENVAT (Amendment) Rules 2009? - Held that - Section 37 of the Central Excise Act, 1944 is a rule making power. Section 37(2)(xvia) provide for the credit of duty paid or deemed to have been paid on the goods used in, or in relation to, the manufacture of excisable goods - Though the power to make rules include the power to give retrospective effect, while doing so the provision under consideration is neither made retrospective nor could it be treated as one. The Gujarat High Court in Mundra Ports & Special Economic Zone Ltd. 2015 (5) TMI 663 - GUJARAT HIGH COURT referred to the contents of the amendment and held that Wherever the Legislature wants to clarify the provision, it clearly mentions intention in the notification itself and seeks to clarify existing provision. Even, if the new provision is added then it will be new amendment and cannot be treated to be clarification on particular thing or goods and/or input and as such, the amendment could operate only prospectively. Appeal allowed - decided in favor of appellant.
Issues:
1. Interpretation of the term "capital goods" under the CENVAT Credit Rules. 2. Treatment of goods like angles, joists, beams, bars, plates in relation to capital goods. 3. Allowance of credit for goods used in fabrication of structures and plants. 4. Retrospective application of the CENVAT (Amendment) Rules 2009. Interpretation of "Capital Goods": The High Court analyzed whether structures embedded in earth are excluded from the definition of "capital goods" under the CENVAT Credit Rules. It referred to the Tribunal's decision that such goods like cement and steel used for laying foundation cannot be considered as inputs for capital goods. The Court highlighted that the definition of "capital goods" under the CENVAT Credit Rules must be in line with excisable goods, emphasizing the need to determine whether plant or structure embedded to earth can be considered excisable goods based on Supreme Court decisions. Treatment of Goods in Relation to Capital Goods: The Court examined whether goods like angles, joists, beams, bars, plates used in the fabrication of structures are to be treated as inputs for capital goods. It considered the Tribunal's ruling that these goods cannot be regarded as inputs for capital goods or final products. The judgment emphasized the distinction between goods used in supporting structures and their eligibility for duty credit under the CENVAT Credit Rules. Allowance of Credit for Fabrication Goods: The High Court addressed the issue of allowing credit for goods like angles, joists, beams, bars, plates used in the fabrication of structures and plants. It noted the Tribunal's decision denying credit for such goods and discussed the implications of the CENVAT Credit Rules in this context. The Court examined the retrospective application of the CENVAT (Amendment) Rules 2009 and its impact on matters arising before the amendment's commencement date. Retrospective Application of Amendment Rules: The judgment analyzed the retrospective nature of the CENVAT (Amendment) Rules 2009 and its applicability to cases arising before the amendment's enforcement. It referenced precedents from other High Courts, such as the Gujarat High Court and the Madras High Court, to determine whether the amendment was clarificatory in nature. The Court discussed the rule-making power under Section 37 of the Central Excise Act, emphasizing the limitations on retrospective effect in the absence of specific provisions. In conclusion, the High Court ruled in favor of the Assessees, setting aside the Tribunal's decision and dismissing the appeals filed by the Revenue. The judgment aligned with the interpretations of previous High Court decisions on the retrospective application of the CENVAT (Amendment) Rules 2009 and the treatment of goods in relation to capital goods under the CENVAT Credit Rules.
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