Appellate Tribunal upholds Cenvat credit claim on capital goods timing.

COMMISSIONER OF C. EX., BHAVNAGAR Versus SAURASHTRA CHEMICALS LTD.

COMMISSIONER OF C. EX., BHAVNAGAR Versus SAURASHTRA CHEMICALS LTD. - 2007 (214) E.L.T. 226 (Tri. - Ahmd.) Issues:
- Dispute over the availability of Cenvat credit for capital goods received during a period with a credit ceiling but installed after the removal of the ceiling.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Ahmedabad involved a dispute regarding the availment of Cenvat credit for capital goods received during a period with a credit ceiling but installed after the removal of the ceiling. The respondent received generators in their factory, originally imported by another entity, and availed 50% of the total duty paid during the year 2000-2001, arguing that the installation took place after 1-4-2000 when the ceiling was removed. The original authority and the Commissioner (Appeals) had permitted this. However, the Department contested this decision, leading to a series of appeals and judgments. The Tribunal, in a previous order, had ruled in favor of the respondent regarding the availment of credit for the same capital goods in the period 2000-01, a decision upheld by the High Court. In the present case, the Tribunal noted that the goods were received during the ceiling period but installed after its removal, making the entire credit available in two installments. Therefore, the Tribunal dismissed the Department's appeal related to the quantum of credit available for 2001-2002, based on the precedent set by previous decisions and the specific circumstances of the case.

This judgment highlights the importance of the timing of installation of capital goods in relation to the period of any credit ceiling in determining the availability of Cenvat credit. It emphasizes the principle that if goods are received when a credit ceiling is in place but installed after its removal, the entire credit should be available in two installments. The Tribunal's decision was influenced by the precedent set in previous cases involving the same capital goods and the interpretation of relevant regulations. The judgment underscores the significance of consistency in decision-making and adherence to legal principles in resolving disputes related to tax credits and duties.