2018 (11) TMI 738 - AT - Central Excise

CENVAT Credit - input/capital goods - MS Items used for fabrication and supporting structures for capital goods and cement was used for laying foundation - Held that - These items are eligible to be used as capital goods is a law settled by various decisions - the issue of eligibility to avail CENVAT credit on various M.S. items prior to 07.07.2009 is well settled in favor of the appellant in the case of Bhavya Cements Limited 2018 (10) TMI 525 - CESTAT HYDERABAD - credit availed prior to 07.07.2009 allowed. Eligibility to avail CENVAT credit post 07.07.2009 - Held that - Appellant availed CENVAT credit, however could not justify that this amount on M.S. items were in fact used for capital goods - demand with interest upheld. Penalty - Held that - Since the major portion of the demands is set aside and also holding that there was litigation which was being undertaken before various judicial forums, there is no reason to visit the appellant with any penalty - penalty set aside. Appeal allowed in part.

Summary

Issues involved: Eligibility to avail CENVAT credit on M.S. items procured, contesting show cause notice on merits and limitation, applicability of "Explanation" to inputs, recent judgments favoring the assessee, justification of CENVAT credit post 07.07.2009, imposition of penalty.

Analysis:

The appeal in this case pertains to the eligibility of availing CENVAT credit on various M.S. items procured between December 2006 to July 2010. The appellant contested a show cause notice demanding around ?6.50 crores along with interest and penalty. The primary contention was that the M.S. items were used for fabrication of capital goods and supporting structures before the introduction of an "Explanation" to inputs on 07.07.2009. The appellant referred to recent judgments in similar cases where the Bench ruled in favor of the assessee (appellant). The adjudicating authority, however, rejected the appellant's submissions and confirmed the demand along with interest and penalty. The issue of eligibility to avail CENVAT credit on M.S. items before 07.07.2009 was settled in favor of the appellant based on established legal principles and precedents.

Regarding the eligibility to avail CENVAT credit post 07.07.2009, an amount of ?5,06,208 was under scrutiny. The appellant could not substantiate that this amount on M.S. items was indeed used for capital goods. Consequently, the confirmation of demand for this specific amount along with interest was upheld. However, considering the significant portion of demands being set aside and the ongoing litigation in various judicial forums, the imposition of penalties was deemed unwarranted. Therefore, the penalties imposed were set aside. The appeal was disposed of with the above determinations on 13.11.2018 by the Tribunal.