2014 (6) TMI 622 - AT - Central Excise

Tribunal grants appeal on Cenvat Credit, sets aside penalty, upholds interest demand with consequential relief.

M/s. Essar Oil Ltd. Versus CCE. & ST. -Rajkot

M/s. Essar Oil Ltd. Versus CCE. & ST. -Rajkot - 2014 (309) E.L.T. 336 (Tri. - Ahmd.) Issues Involved:1. Eligibility of Cenvat Credit on capital goods where the owner is different from the appellant.2. Denial of Cenvat Credit due to non-filing of intimation regarding receipt of capital goods.3. Denial of Cenvat Credit on original or extra copy of invoices.4. Denial of Cenvat Credit on goods not falling under specific chapters of the Central Excise Tariff Act.5. Denial of Cenvat Credit on consumables used during the installation/erection of the factory.6. Demand of interest on reversed Cenvat Credit.Issue-wise Analysis:1. Eligibility of Cenvat Credit on capital goods where the owner is different from the appellant:The adjudicating authority denied Cenvat Credit of Rs.20,61,57,657/- on the grounds that the invoices were in the name of Essar Projects Ltd., not the appellant. The appellant argued that the invoices indicated them as the consignee and that ownership is not a criterion for availing credit. The Tribunal found merit in the appellant's argument, referencing case laws like Jewel Brushes Pvt. Ltd. and others, and concluded that the credit should be allowed since the goods were received, consumed, and duty-paid. The demand was set aside, and the appeal was allowed.2. Denial of Cenvat Credit due to non-filing of intimation regarding receipt of capital goods:The adjudicating authority denied Cenvat Credit of Rs.38,74,887/- due to non-submission of intimation to the Jurisdictional Superintendent. The appellant contended that the goods were received and used in setting up the refinery, and non-filing of the declaration was an inadvertent procedural lapse. The Tribunal agreed, citing the Madras High Court's decision in Kothari Sugars & Chemicals, and held that procedural lapses should not deny substantive benefits. The credit was allowed.3. Denial of Cenvat Credit on original or extra copy of invoices:The adjudicating authority denied Cenvat Credit of Rs.6,68,773/- and Rs.2,34,351/- because the credit was availed on original or extra copies of invoices. The appellant argued that there was no dispute regarding the duty-paid nature of the goods. The Tribunal, referencing decisions by the Gujarat High Court in Steelco Gujarat Ltd. and Vimal Enterprises, found that credit should be allowed as long as the goods were received and consumed. The credit was allowed.4. Denial of Cenvat Credit on goods not falling under specific chapters of the Central Excise Tariff Act:The adjudicating authority denied Cenvat Credit of Rs.1,95,84,057/- and Rs.25,33,813/- on goods not falling under Chapters 84, 85, and 90. The appellant argued that these items were used as components or spares in the refinery's machinery. The Tribunal found that the items were indeed used in the manufacturing process and referenced the decision in Essar Steel Ltd. The credit was allowed.5. Denial of Cenvat Credit on consumables used during the installation/erection of the factory:The adjudicating authority denied Cenvat Credit of Rs.94,00,484/- on consumables like enamels, paints, and chemicals used during the refinery's construction. The appellant argued that these were essential for setting up the factory. The Tribunal agreed, noting that these items were necessary for maintaining the plant and machinery. The credit was allowed.6. Demand of interest on reversed Cenvat Credit:The adjudicating authority demanded interest on Rs.39,02,938/- reversed by the appellant. The appellant argued that interest should not be charged as the factory was not operational when the credit was availed. The Tribunal, referencing the Supreme Court's decision in Indswift Laboratories Ltd., held that interest is payable even if the credit is reversed. The demand for interest was upheld.Conclusion:The Tribunal allowed the appeal regarding the eligibility of Cenvat Credit on various items, set aside the penalty, and upheld the demand for interest on the reversed credit. The appeal was disposed of with consequential relief as indicated.