2022 (5) TMI 565 - AT - Central Excise

CENVAT Credit - steel items - inputs and capital goods used in connection with the erection and commissioning of the plant - periods in dispute in the present appeals are November 2005-August 2006 December 2006-March 2007 May 2007-March 2008 and January 2009-March 2009 - HELD THAT - The credit of Rs.25, 63, 542/- has been disallowed by the Ld. Commissioner (Appeal) merely on the basis of the decision of the Larger Bench in the case of VANDANA GLOBAL LTD. VERSUS CCE 2010 (4) TMI 133 - CESTAT NEW DELHI (LB) - The observation made in Para 5.4 of the Appeal Order is examined wherein the Learned Commissioner (Appeals) has relied on the decision of Larger Bench in the case of Vandana Global to disallow the credit. The said decision of the Tribunal s Larger Bench was challenged by the assessee before the Hon ble Chhattisgarh High Court in M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER CENTRAL EXCISE AND CUSTOMS CENTRAL EXCISE 2018 (5) TMI 305 - CHHATTISGARH HIGH COURT wherein the Tribunal s decision has been set aside on 13.09.2017 i.e. after the date of passing of the appeal order impugned herein. The contentions of the Ld. Advocate is agreed upon that the very basis followed by the Learned Commissioner (Appeals) has now been settled in their favour. In the facts of the present case it is not in dispute that the various steel items have been used for the purpose of setting up of sponge iron kiln along with the power plant as also certified by the Chartered Engineer have been duly verified by the lower authorities in the adjudication stage. Therefore applying the user test principle as followed by the various High Courts the assessee is entitled to avail credit on the steel items. Appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against disallowance of CENVAT Credit on steel items.

Analysis:
The case involved two appeals filed against an Order-in-Appeal disallowing and allowing CENVAT Credit on steel items. The appellant, engaged in manufacturing iron and steel items, availed credit on inputs and capital goods used in erecting and commissioning a plant. The dispute arose when the authorities disallowed a portion of the credit on steel items used for structural support, citing a retrospective amendment. The assessee challenged this decision, arguing that the amendment was not retrospective, supported by High Court judgments. The "user test" principle was also invoked, emphasizing the integral role of steel items in the manufacturing process. The Tribunal agreed with the assessee, allowing the appeal and rejecting the Revenue's appeal. The decision highlighted the importance of legal interpretations and principles like the "user test" in determining CENVAT Credit eligibility.

This judgment addressed the interpretation of legal provisions regarding CENVAT Credit entitlement on steel items used for erecting and commissioning a plant. The dispute centered on whether a retrospective amendment disallowed credit on structural items, leading to conflicting decisions by the lower authorities. The Tribunal considered High Court judgments that clarified the non-retrospective nature of the amendment, supporting the assessee's claim for credit. The application of the "user test" principle, as established by the Supreme Court and High Courts, played a crucial role in determining the eligibility of the assessee for CENVAT Credit on steel items. By aligning with the legal positions set by the High Courts, the Tribunal upheld the assessee's right to avail credit, emphasizing the importance of legal interpretations and established principles in tax matters.

The judgment provided a detailed analysis of the factual background, legal arguments, and precedents relevant to the dispute over CENVAT Credit on steel items. It highlighted the assessee's compliance with the "user test" principle and the supporting documentation provided, such as the Chartered Engineer's certificate. By referencing High Court decisions that clarified the retrospective nature of the amendment restricting credit on structural items, the Tribunal established a legal basis for allowing the assessee's appeal. The judgment underscored the significance of legal interpretations and principles in resolving tax disputes, ensuring fair treatment and adherence to established legal standards in matters concerning CENVAT Credit eligibility.