Tribunal grants CENVAT credit for capital goods in job-work appeal

The Tribunal allowed the appeal, granting the appellant CENVAT credit on capital goods received from the principal manufacturer for job-work activities. The show-cause notice alleging suppression of facts was deemed unsustainable due to the extended limitation period. Relying on the Hongo India case, the Tribunal held that the appellant was entitled to the credit as the capital goods were supplied for manufacturing goods with appropriate duty payment.

---

---

Issues: Appeal against denial of CENVAT credit on capital goods; Allegation of suppression of facts; Entitlement to CENVAT credit on capital goods received from principal manufacturer.

Analysis:
- The appellant filed an appeal against the order denying CENVAT credit on capital goods against duty paying documents. The appellant, a job-worker of L&T, received machineries, moulds, and tools from L&T between July 2000 to March 2002 on which duty had been paid by L&T. The appellant informed the department about availing CENVAT credit on these capital goods on 18/12/2000. Despite queries and a show-cause notice alleging suppression issued in 2005, the adjudicating authority dropped the notice on limitation grounds. However, the Commissioner (Appeals) set aside the order and denied the CENVAT credit. The appellant appealed to the Tribunal challenging this decision.

- The appellant's counsel argued that they had informed the department about availing CENVAT credit and responded to queries in February 2001. The counsel cited a previous Tribunal case to support the appellant's entitlement to the credit. The Departmental Representative contended that since the appellant did not have proper documents for the capital goods, they were not eligible for the credit.

- The Tribunal examined the case and noted that the appellant had informed the department in 2000 about taking credit on the capital goods supplied by the principal manufacturer for job-work activities. Therefore, the show-cause notice in 2005 alleging suppression was deemed unsustainable due to the extended limitation period. Additionally, on merits, the Tribunal referred to the Hongo India case, stating that if a buyer supplies capital goods to the assessee for manufacturing goods on a job-work basis with appropriate duty payment, the assessee is entitled to take credit on the duty paid for the capital goods. Consequently, the Tribunal set aside the impugned order and allowed the appeal.

---