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2022 (11) TMI 338 - AT - Central ExciseCENVAT Credit - capital goods after 01.04.2016 - housekeeping services - Equal penalty on the appellant under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - HELD THAT - The definition of capital goods after 01.04.2016 does not exclude any equipment or appliance used in an office . For this reason, it is held that the credit availed by the appellant on the said computer server after 01.04.2016 would be eligible. It has also been stated by the appellant that these form an integral part of their manufacturing process as all the data is collected in the said server. Housekeeping services - HELD THAT - The credit availed by the appellant has been disallowed alleging that these services are consumed in the Mumbai office. It is not in dispute that the Mumbai office is an integral part of the business of the appellant and is doing the administrative work in respect of the appellant s factory. For this reason, the credit availed by the appellant on Housekeeping Services at their Mumbai office is eligible. Equal penalty on the appellant under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - HELD THAT - The issue being an interpretational one and the appellant having been eligible to avail the credit on the said capital goods after 01.04.2016 as well as the credit on Housekeeping Services, the penalty imposed requires to be set aside. Appeal allowed in part.
Issues:
1. Eligibility of CENVAT Credit on computer server as capital goods. 2. Eligibility of CENVAT Credit on Housekeeping Services. 3. Imposition of penalty under Rule 15(2) of the CENVAT Credit Rules, 2004. Analysis: Issue 1: Eligibility of CENVAT Credit on computer server as capital goods The appellant availed credit on a computer server installed at their Mumbai office, claiming it as a capital good integral to their manufacturing process. The Original Authority disallowed the credit, citing the definition of "capital goods" that excluded equipment used in an office before 01.04.2016. However, post the amendment, the definition no longer excluded office equipment. The Tribunal held that the credit on the computer server after 01.04.2016 was eligible as it formed an integral part of the manufacturing process by collecting essential data. Issue 2: Eligibility of CENVAT Credit on Housekeeping Services The appellant also availed CENVAT Credit on Housekeeping Services utilized in their Mumbai office, which was challenged by the Department. The Tribunal noted that the Mumbai office played a crucial role in the appellant's business operations and administrative work for the factory. Consequently, the credit on Housekeeping Services consumed at the Mumbai office was deemed eligible. Issue 3: Imposition of Penalty The authorities imposed a penalty on the appellant under Rule 15(2) of the CENVAT Credit Rules, 2004. However, considering the interpretational nature of the issue and the appellant's eligibility for the credit on the computer server post-April 2016, as well as the Housekeeping Services credit, the Tribunal set aside the penalty. The Tribunal modified the impugned order by allowing the credit on capital goods after 01.04.2016, the credit on Housekeeping Services, and by rescinding the penalty imposed on the appellant. In conclusion, the Tribunal partly allowed the appeal, granting relief to the appellant by recognizing the eligibility of CENVAT Credit on the computer server post-April 2016 and on Housekeeping Services, while also nullifying the penalty imposed.
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