2019 (2) TMI 557 - AT - Central Excise

CENVAT Credit - inputs - steel plates, TMT bars, angles, beams etc. which were used for fabrication of various equipments, components, accessories, parts to the kiln, conveyor system, storage tanks/bunkers, in their unit - scope of SCN - Held that - The impugned order has travelled beyond the show-cause notice because in the show-cause notice, the only allegation is that the MS Angles, MS Bars, Channels which have been used in the fabrication of various equipments are embedded to earth so as to form immovable property and hence cannot be considered as capital goods as per the definition of capital goods under Rule 2(a) of the Cenvat Credit Rules, 2004. In the impugned order, the Commissioner has accepted that credit cannot be denied on the ground of immovability but still he has denied the credit by invoking the user test which was not an allegation in the show-cause notice - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against rejection of CENVAT credit on steel plates, TMT bars, angles, beams used for fabrication of various equipment.
- Allegation of irregular CENVAT credit availed on goods.
- Denial of credit based on immovability and non-production of documents.
- Applicability of settled legal positions and decisions favoring the appellant.
- Limitation period for credit demand.
- Interpretation of capital goods definition.

Analysis:

The appeal challenged the rejection of CENVAT credit on steel plates, TMT bars, angles, and beams used for equipment fabrication. The Range Officer observed irregular CENVAT credit availed on these items, leading to a show-cause notice demanding recovery of the credit amount. The Assistant Commissioner disallowed the credit and imposed penalties, upheld by the Commissioner(Appeals).

The appellant argued that the impugned order lacked proper appreciation of facts and law. They contended that denial of credit based on non-production of documents exceeded the show-cause notice's scope. Citing relevant decisions, the appellant asserted eligibility for credit based on usage certificates and other supporting documents, emphasizing settled legal positions favoring their case.

Regarding the denial of credit on grounds of immovability, the appellant highlighted the Chartered Engineer certificate and work completion certificate as evidence of proper usage for capital goods. They argued that subsequent decisions favored their interpretation, and the demand for credit prior to November 2009 was time-barred. The appellant relied on a specific case to support their limitation argument.

In response, the AR defended the impugned order, leading to a detailed consideration by the Tribunal. The Tribunal found that the impugned order extended beyond the show-cause notice's allegations. While acknowledging the immovability aspect, the Tribunal ruled in favor of the appellant, citing precedents and rejecting the denial of credit based on the user test not raised in the notice. The Tribunal's decision favored the appellant, setting aside the impugned order with consequential relief.

In conclusion, the Tribunal's detailed analysis focused on the scope of the show-cause notice, proper appreciation of legal positions, and the interpretation of capital goods definition. The judgment emphasized adherence to procedural fairness and legal principles, ultimately ruling in favor of the appellant based on established legal precedents and factual evidence presented during the proceedings.