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TMI Blog2017 (3) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... pital goods is not a point for decision. There is no irregular utilization of credit by the appellant and no such allegation has been made in the show cause notice. Even if the appellant has entered the credit in their books of accounts no utilization is possible without commencement of production. In effect, the credits available on the capital goods will come to be entered as availed and utilized only on production of dutiable final product. We find no justification to deny Cenvat credit on capital goods which, are otherwise legitimately available to the appellant - credit allowed. CENVAT credit - input services - works contract service, GTA, telephone, security service, consulting engineering service, rent a cab operator service etc - denial on the ground that credit on input services can be allowed only if used for provision of a service liable to service tax or manufacture of goods liable to excise duty - Held that: - The credits availed by the appellant are with reference to construction of factory. The said activity is covered by the definition of input service during the relevant time. It is also to be noted that the definition of “input service” is very broad and includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sought to be made originally, as per show cause notice, on the ground that it is the contractor who is the manufacturer and not the appellant. However, the impugned order accepted the fact that the appellant is the manufacturer. Still the credit was denied on entirely a different ground that the plant and machinery erected has become immovable property as they are embedded to earth. Thus, the Original Authority has traveled beyond the allegation made in the show cause notice and as such on this ground alone the findings are to be set aside. Further, on merit it is submitted that the reliance placed by the Original Authority on the decision of Larger Bench of the Tribunal in Vandana Global Ltd. vs. CCE, Raipur reported in 2010 (253) E.L.T. 440 (Tri. LB) is not appropriate. The said decision stands over-ruled by Hon ble Gujarat High Court in Mundra Ports Special Economic Zone Ltd. vs. CCE CUS reported in 2015 (39) S.T.R. 726 (Guj.) . Reliance was placed on the decision of Hon ble Supreme Court in CCE, Jaipur vs. Rajasthan Spinning Weaving Mills Ltd. reported in 2010 (255) E.L.T. 481 (S.C.) and the decision of Tribunal vide final order No. 53775/2016 dated 27/09/2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng credit availed on goods used for fabrication of plant and machinery we note that the show cause notice proposed denial of credit only on the ground that the manufacturer of the capital goods were actually the contractors and not the appellant. Whereas, the Original Authority accepted the plea of the appellant that appellants are to be considered as manufacturers and not the contractors. However, he proceeded to deny the credit on a different ground that the appellants are not eligible for the credits as the items used are for fabrication of plant and machinery embedded to earth and these items are mainly foundation or supporting structures. Reliance was placed on the decision of the Tribunal in Vandana Global Ltd . (supra), we find that the allegation made in the show cause notice was not the basis on which a final decision was taken by the Original Authority. On this ground alone the confirmation ordered can be held as unsustainable. The impugned order travelled beyond the show cause notice and as held by Hon ble Supreme Court in CC, Mumbai vs. Toyo Engineering India Limited reported in 2006 (201) E.L.T. 513 (S.C.) , the same is not permissible. Even on merit, we find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this will be covered within the decision of the Larger Bench in the case of Vandana Global Ltd. (supra). 14. The Larger Bench decision in Vandana Global Ltd. s case (supra) laid down that even if the iron and articles were used as supporting structures, they would not be eligible for the credit. Considering the amendment made w.e.f. 7-7-2009 as a clarification amendment and hence to be considered retrospectively. However, we find that the said decision of the Larger Bench was considered by the Hon ble Gujarat High Court in the case of Mundra Ports Special Economic Zone Ltd., 2015 (04) LCX0197 = 2015 (39) S.T.R. 726 (Guj.) , wherein it was observed that the amendment made on 7-7-2009 cannot be held to be clarificatory and as such would be applicable only prospectively. 15. We find that the controversy can be laid to rest by making a reference to the decision of the Apex Court in the case of CCE, Jaipur v. Rajasthan Spinning Weaving Mills Ltd., 2010 (255) E.L.T. 481 (S.C.) , wherein the Hon ble Supreme Court has considered an identical issue of steel plates and MS channels used in the fabrication of chimney for diesel generating set. The credit stands allowed in the light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing credit/ credit on input used. The Hon ble Punjab Haryana High Court in CCE, Jullandhar vs. Pioneer Agro Extracts Ltd. 2008 (230) E.L.T. 597 (P H) held that channels and angles, joint of iron steel used for installation of batch vessel or essential plant and machinery and are eligible for credit as capital goods. The Hon ble Madras High Court in Thiru Arooran Sugar - 2015-TIOL-1734-HC-Mad.CX held that credit on M.S. Plates, angles, channels utilized in construction / erection of plant were eligible for credit. The High Court observed that the principle laid-down by the Hon ble Supreme Court in Rajasthan Spinning and Weaving Mills Ltd. (supra) is applicable to such situation. 7. We note that the Tribunal has been consistently following the ratio that the steel items when they are used in fabrication of capital goods and their accessories inside the manufacturer premises are eligible for credit by applying user test as evolved by the Hon ble Supreme Court in Rajasthan Spinning and Weaving Mills Ltd. (supra). A reference can be made to latest decision of the Tribunal in Singhal Enterprises Pvt. Ltd. vs. CC CE, Raipur vide final order No. 53013/2016 dated 12/08/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant were duty paid and the credit on the same cannot be denied on the ground that they were embedded to earth after installation. The excisability of capital goods is not a point for decision. There is no irregular utilization of credit by the appellant and no such allegation has been made in the show cause notice. Even if the appellant has entered the credit in their books of accounts no utilization is possible without commencement of production. In effect, the credits available on the capital goods will come to be entered as availed and utilized only on production of dutiable final product. We find no justification to deny Cenvat credit on capital goods which, are otherwise legitimately available to the appellant. The reasoning adopted by the Original Authority placing reliance on the circular dated 26/12/1994 is misplaced and legally unsustainable. Accordingly, we find the appellant s eligibility for credit cannot be denied. 7. On the third issue regarding denial of credit on input services for construction of factory by the appellant, we note that the appellants availed credit of service tax paid on various input services like works contract service, GTA, telephone, s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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