2023 (1) TMI 388 - AT - Central Excise

CENVAT Credit - capital goods - availment of 100% credit on wooden dies, aluminum litho plates and rubber blanket under the category of inputs - Revenue is of the view that these are capital goods and therefore only 50% credit should have been taken in first year - Seeking reversal of Cenvat credit, interest and imposition of penalty - time limitation - HELD THAT - The issue involved in the case GUARDIAN PLASTICOTE LTD. VERSUS COMMISSIONER OF C. EX., DAMAN 2008 (12) TMI 534 - CESTAT, AHMEDABAD is similar to the issue involved in the instant case that using engraved printed cylinder is an inputs. It was held by the Tribunal that on the ground of limitation, the demand for the period beyond one year from the date of show cause notice fails. I also agree with the ld. Advocate s argument that the lower authorities have not considered as to whether the cylinder can be considered as an input. This aspect needs to be considered in detail. Therefore the matter has to go back to the Original Adjudicating Authority to consider whether cylinder can be considered as an input or it has to be treated as capital goods. It is noticed that in the instant case also, the nature of goods being capital goods or inputs, can be a matter of opinion - Relying on the decision of the Tribunal in the case of Guardian Plasticote Limited vs.CCE, Daman and the fact that the learned Counsel has admitted that they are ready to pay interest for the disputed period, the appeal is partly allowed. The matter is remanded to the Adjudicating Authority to calculate the amount of interest involved. In the facts of the case, the penalty is set-aside. The appeal is allowed by way of remand to the Adjudicating Authority.

Summary

Issues:
- Reversal of Cenvat credit on wooden dies, aluminum litho plates, and rubber blanket
- Determination of goods as capital goods or inputs
- Calculation of interest and penalty imposition

Analysis:
1. Reversal of Cenvat Credit: The appellant, M/s. Yamir Packaging Pvt. Limited, filed an appeal against the demand for the reversal of Cenvat credit, interest, and penalty. The appellant had availed 100% Cenvat credit on wooden dies, aluminum litho plates, and rubber blanket categorized as inputs. However, the Revenue contended that these items should be considered capital goods, allowing only 50% credit in the first year. The appellant argued that these goods were consumable with a short life span. They also claimed entitlement to 50% credit in the subsequent financial year even if considered capital goods, citing a previous Tribunal decision. The Tribunal noted the similarity of this issue to a previous case involving the use of engraved printed cylinders as inputs, emphasizing the need for a detailed consideration on whether the goods should be classified as capital goods or inputs.

2. Determination of Goods: The Tribunal referred to the previous case of Guardian Plasticote Limited vs. CCE, Daman, where it was highlighted that even if goods are considered capital goods, the demand should be limited to interest for the period of excess credit availed. The Tribunal emphasized that the nature of goods as capital goods or inputs could be subjective, requiring a thorough analysis. In line with the appellant's willingness to pay interest for the disputed period, the Tribunal partly allowed the appeal, remanding the matter to the Adjudicating Authority for the calculation of the interest amount. The penalty was set aside based on the facts of the case.

3. Calculation of Interest and Penalty Imposition: The Tribunal, considering the readiness of the appellant to pay interest for the disputed period, allowed the appeal by remanding the matter to the Adjudicating Authority for the calculation of the interest amount. The penalty was set aside based on the circumstances of the case. The decision was made in accordance with the principles established in previous Tribunal judgments and the willingness of the appellant to address the issue of excess credit availed.

In conclusion, the judgment by the Appellate Tribunal CESTAT Ahmedabad addressed the issues of reversal of Cenvat credit, determination of goods as capital goods or inputs, and calculation of interest and penalty imposition. The decision highlighted the importance of considering the nature of goods and the willingness of the appellant to rectify any discrepancies in the availed credit.