2014 (1) TMI 1062 - AT - Central Excise

Tribunal rules on CENVAT credit entitlement and Central Excise duty demand

M/s JSW Steel Limited Versus Commissioner of Central Excise, Belgaum

The tribunal found no prima facie case for the appellant regarding entitlement to CENVAT credit on goods used by another company in setting up a power ... Denial of cenvat credit – Capital goods used in the setting up of plant - Waiver of Pre-deposit – Held that:- The procurement of capital goods and inputs by the appellant and JSWEL and utilisation in setting up of the power plant were intimated to the department - The factum of availment of CENVAT credit on such capital goods and inputs was disclosed to the department through ER-1 Returns filed from time to time – Thus, there was no suppression of facts which can be attributed to the appellant - prima facie case on the ground of limitation, against a major part of the demand confirmed against the appellant – the appellant is directed to pre-deposit an amount of Rupees Nine lakhs ninety thousand as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted. Issues:1. Entitlement to CENVAT credit on capital goods and inputs used by another company in setting up a power plant.2. Limitation period for demand of Central Excise duty.Analysis:Issue 1: Entitlement to CENVAT creditThe appellant sought waiver and stay regarding the demand of Central Excise duty and penalty amount for the period from September 2007 to March 2010. The dispute arose from the appellant taking CENVAT credit on capital goods and inputs used by another company, JSWEL, in setting up a power plant adjacent to the appellant's factory premises. The appellant argued that ownership of the power plant did not affect their entitlement to the credit. However, the tribunal found no prima facie case for the appellant as the goods were used by JSWEL in their own plant and not by the appellant in their factory. The tribunal considered the ownership and usage of the goods in determining the entitlement to CENVAT credit.Issue 2: Limitation periodThe appellant contended that a major part of the demand was time-barred due to the absence of suppression of facts. They argued that they promptly disclosed all material facts, including the setting up of the power plant by JSWEL, incorporation of the plant in their factory plan, and availing CENVAT credit on the goods used. The appellant claimed that no suppression of facts could be attributed to them. The adjudicating authority invoked the extended period of limitation alleging manipulation of material facts by the appellant. However, after considering submissions and relevant documents, the tribunal found a prima facie case on the ground of limitation against a major part of the demand. The tribunal observed that the appellant had intimated material facts to the department at appropriate stages, indicating no suppression of facts.In conclusion, the tribunal directed the appellant to pre-deposit a specified amount within a given timeframe and report compliance. Subject to compliance, there would be a waiver of pre-deposit and stay of recovery for the remaining dues. The judgment highlighted the importance of ownership, usage, and timely disclosure of material facts in determining entitlement to CENVAT credit and the applicability of the limitation period for demands of Central Excise duty.