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2019 (6) TMI 199 - HC - Central ExciseCENVAT Credit - inputs/capital goods - Shapes Sections, MS Plates, HR Coils, MS Angles, Iron and Steel Bars, HR Sheets, Mill Plates MS Channel, Hot Strip Mill Plate, Joist, Thermo Mill Tractcet, Section etc. - denial of credit on the ground that these items had been used either for repair and maintenance of plant and machinery or modification of their existing plant and machinery - year 2004-05 and 2005-06 - Circulars dated 2.4.2012 and 18.5.2012 - HELD THAT - Since items used by the respondent-assessee were used as structure to hold the capital goods, hence, it is wrong to say that respondents are not eligible to CENVAT credit. Therefore, in our considered opinion, the Tribunal has rightly allowed the appeal and the reasoning given by the Tribunal cannot be said to be not cogent or correct appreciation of evidence on record. Tribunal has rightly held respondent-assessee is entitled to Cenvat Credit in respect of items used as structural support for capital goods. Appeal dismissed - decided against Revenue.
Issues Involved:
1. Whether the Tribunal was correct in setting aside the Order in Original dated 30/07/2010 ignoring the decision in Bajaj Hindustan Ltd. Vs. Union of India. 2. Whether the Tribunal was correct in ignoring Circular No. 966/09/2012-CX.1 dated 18/05/2012. 3. Whether the Tribunal's Final Order dated 02/11/2017 was substantial in terms of Rule 2(k) of the Central Credit Rules, 2004. Issue-wise Detailed Analysis: 1. Tribunal's Decision vs. Bajaj Hindustan Ltd. Case: The Tribunal had set aside the Order in Original dated 30.7.2010, which had disallowed CENVAT credit on certain items used by the respondent-assessee, M/s DSCL Sugar. The revenue argued that this decision ignored the precedent set by Bajaj Hindustan Ltd. Vs. Union of India, which held that CENVAT credit is not admissible on inputs not used for manufacturing capital goods. However, the Tribunal found that in the present case, the items in question were used as structural support for capital goods, making them eligible for CENVAT credit. The Court noted that Bajaj Hindustan Ltd. did not formulate or answer any substantive question of law regarding the items' eligibility for CENVAT credit. 2. Ignoring Circular No. 966/09/2012-CX.1: The revenue contended that the Tribunal ignored Circular No. 966/09/2012-CX.1, which clarified that CENVAT credit is not admissible for structural components used for laying foundations or making structures for supporting capital goods. The Tribunal, however, found that this circular was issued in the context of an amended definition of inputs under Rule 2(k) of the CENVAT Credit Rules, 2004, which was not applicable to the period in question (2004-05 and 2005-06). The Court agreed with the Tribunal, noting that the circulars dated 2.4.2012 and 18.5.2012 were not relevant for the period under dispute. 3. Substantiality of Tribunal's Final Order: The Tribunal's Final Order dated 2.11.2017 allowed the appeal of the respondent-assessee, holding that the items used as structural support for capital goods were eligible for CENVAT credit. The revenue argued that this decision was not substantial in terms of Rule 2(k) of the Central Credit Rules, 2004. The Court examined the relevant rules and found that prior to the amendment on 7.7.2009, inputs included goods used in the manufacture of capital goods further used in the factory of the manufacturer. The amendment excluded certain items used for construction or supporting structures, but this was not applicable retrospectively. The Court also noted that other High Courts, including Gujarat and Madras, had held that such amendments were not retrospective. The Tribunal's decision was consistent with these precedents and the Apex Court's ruling in Rajasthan Spinning & Weaving Mills Ltd. Conclusion: The Court concluded that the Tribunal correctly allowed the CENVAT credit for the items used as structural support for capital goods. The Tribunal's decision was based on a proper appreciation of evidence and applicable legal principles. The appeal by the revenue was dismissed, and the questions were answered in favor of the respondent-assessee.
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