Tribunal Upholds Cenvat Credit on Capital Goods Setup Items

The Tribunal upheld the Commissioner (Appeals) order allowing Cenvat Credit on items used for setting up capital goods, dismissing the revenue's appeal. The Tribunal relied on the Hon'ble Apex Court decision in Rajasthan Spinning & Weaving Mills Ltd., stating that Cenvat credit is available for such items. Despite the revenue's arguments, the Tribunal found the amended explanation in Rule 2(k) of CENVAT Credit Rules, 2004, to be clarificatory, and ruled in favor of the respondent based on the Apex Court's decision, overriding the Tribunal's Larger Bench decision.

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Issues:
Appeal against Commissioner (Appeals) order allowing Cenvat Credit on specific items used for setting up capital goods.

Analysis:
The appellant appealed against the impugned order where the Commissioner (Appeals) allowed Cenvat Credit availed by the respondent on MS Bar, CTD bars, beams, etc., used for setting up the klin cooler and chimney in their factory. The revenue contended that these items do not fall under Rule 2(k) of the CENVAT Credit Rules, 2004, thus the respondents are not entitled to input credit. The matter was adjudicated, and demand was confirmed by the Adjudicating Authority. However, the Commissioner (Appeals) relied on a decision by the Hon'ble High Court of Bombay in the respondent's own case and set aside the order of adjudication. The revenue was aggrieved by this decision and appealed to the Tribunal.

The revenue argued that as the items like MS bars, CTD bars, beams were used for setting up the kiln, cooler, and chimney, which are attached to the earth, the respondent is not entitled to take Cenvat Credit on these items. They cited a decision by the Larger Bench of the Tribunal in Vandana Global Ltd. to support their position. On the other hand, the respondent's counsel contended that during the relevant period, the definition under Rule 2(k) of CENVAT Credit Rules, 2004, included the items in question for availing Cenvat Credit. They referred to a decision by the Hon'ble Apex Court in the case of Rajasthan Spinning & Weaving Mills Ltd., which held that the assessee is entitled to take Cenvat credit on items used for setting up capital goods. They also mentioned a decision by the Tribunal in the case of Jindal Steel & Power Ltd., which supported the respondent's position.

After hearing both sides and considering the submissions, the Tribunal noted that the explanation amended in 2009 of Rule 2(k) of CENVAT Credit Rules, 2004, was clarificatory. Despite this, the Hon'ble Apex Court in Rajasthan Spinning & Weaving Mills Ltd. held that Cenvat credit on the items in question is available if they have been used for setting up capital goods. The Tribunal held that the decision of the Hon'ble Apex Court prevails over the decision of the Larger Bench of the Tribunal. Therefore, following the decision of the Hon'ble Apex Court, the Tribunal concluded that the respondent is entitled to Cenvat Credit on the items used for setting up capital goods during the relevant period. Consequently, the Tribunal found no infirmity in the impugned order and upheld it, dismissing the appeal of the revenue.

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