2021 (3) TMI 179 - HC - Central Excise

CENVAT Credit - Capital goods or not - M.S.Angles - M.S.Joint Beams - TOR Steel - Whether the order of the Tribunal placing reliance on Vandana Global to disallow the claim of CENVAT on M.S.Angles, M.S.Joint Beams and TOR Steel is unsustainable in view of the fact that it has lost its value as a precedent in view of the contrary view expressed by the Supreme Court in Central Excise, Jaipur, vs. Rajasthan Spinning Weaving Mills Ltd. 2010 (7) TMI 12 - SUPREME COURT ? HELD THAT - We had an occasion to consider similar questions in the case of Dalmia Cements (Bharat) Ltd. vs. CESTAT, Chennai Ors., 2021 (1) TMI 927 - MADRAS HIGH COURT , wherein the civil miscellaneous appeal filed by the assessee was allowed, by holding that In the light of the recent decision of the Hon'ble Division Bench of this Court in the case of M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX THE COMMISSIONER OF CENTRAL EXCISE, 2015 (3) TMI 661 - MADRAS HIGH COURT wherein an identical question was considered and the only difference being that the case arose under the CENVAT Credit Rules, which subsequently stood substituted by the MODVAT Rules. The substantial questions of law are answered in favour of the assessee - appeal allowed.

Summary

Issues:
Interpretation of Central Excise Act, 1944 regarding disallowance of CENVAT credit on certain items like M.S. Angles, M.S. Joint Beams, and TOR Steel as capital goods.

Analysis:
The appeal under Section 35G of the Central Excise Act, 1944 challenges the order of the Customs, Excise and Service Tax Appellate Tribunal disallowing CENVAT credit on M.S. Angles, M.S. Joint Beams, and TOR Steel. The substantial questions of law raised pertain to the sustainability of the Tribunal's order in light of precedents and the qualification of these items as capital goods. The High Court considered similar cases where CENVAT credit was allowed on structural steel items used for civil construction activities. The court referred to relevant judgments and legislative intent to determine the eligibility of these items for CENVAT credit.

The High Court analyzed the Tribunal's order and previous decisions in favor of the assessee regarding the admissibility of CENVAT credit on items like OPC cement, M.S. plates, beams, angles, and sheets used in construction activities. The court highlighted that the term "plant" was not defined as capital goods in the CENVAT Credit Rules. By referring to previous rulings, the court emphasized the importance of structural components for machinery erection and functioning. The court dismissed the Revenue's appeal based on factual findings and legal interpretations from earlier cases.

Relying on its own previous orders, the High Court upheld the Tribunal's decision to allow CENVAT credit on capital goods used in a cement manufacturing plant. The court emphasized the principles laid down in earlier judgments and reiterated that immovability is not a criterion for denying CENVAT credit. By aligning with past decisions and maintaining consistency, the court ruled in favor of the appellant/assessee, setting aside the Tribunal's order and answering the substantial questions of law in favor of the assessee.

In conclusion, the High Court allowed the civil miscellaneous appeal, set aside the Tribunal's order, and answered the substantial questions of law in favor of the appellant/assessee. The court's decision was based on established legal principles, precedents, and interpretations of the Central Excise Act, 1944 regarding the eligibility of certain items for CENVAT credit as capital goods used in specific industrial activities.