Cenvat credit denied on materials used for maintenance, roofing and erection, while penalty was set aside.
Cenvat credit was held inadmissible on HR sheets, mill plates, steel plates, jointing sheets and paints where the recorded use was for staging and supporting structures, general maintenance, roofing and erection of factory and store, rather than fabrication of capital goods as required under the Cenvat Credit scheme. The credit claim therefore failed, and reversal of the credit with interest was directed. Penalty was not warranted because the entitlement to credit was genuinely ed on the facts, so the penal consequence was set aside.
Issues: (i) Whether Cenvat credit was admissible on HR sheets, mill plates, steel plates, jointing sheets and paints said to have been used in fabrication of capital goods or in general maintenance, roofing and erection activities; (ii) whether penalty was imposable.
Issue (i): Whether Cenvat credit was admissible on HR sheets, mill plates, steel plates, jointing sheets and paints said to have been used in fabrication of capital goods or in general maintenance, roofing and erection activities.
Analysis: The recorded use of the goods was for staging and supporting structures, general maintenance, roofing purposes and erection of factory and store. On those findings, the goods were not used for fabrication of capital goods in the manner required for eligibility under the Cenvat Credit scheme. The credit claim, therefore, could not be sustained.
Conclusion: Cenvat credit was not admissible on the disputed items, and reversal of the credit with interest was directed.
Issue (ii): Whether penalty was imposable.
Analysis: The entitlement to credit had been in dispute during the relevant period, and the controversy turned on the admissibility of the claim on the facts recorded below. In that situation, penalty was not warranted.
Conclusion: Penalty was not imposable.
Final Conclusion: The credit disallowance was upheld, while the penal consequence was set aside, resulting in a partial success for the revenue.
Ratio Decidendi: Goods used for general maintenance, roofing, erection and supporting structures, rather than for fabrication of capital goods, do not qualify for Cenvat credit under the relevant rule.
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