Cenvat credit on tippers denied, penalty removed, and confiscation upheld with reduced redemption fine.

Tippers used for providing site formation and allied services were held not to qualify as capital goods for Cenvat credit during the relevant period, so the credit was inadmissible. Penalty was set aside because the dispute arose in a period where a bona fide view on eligibility could be taken, making penal consequences unwarranted. Confiscation of the tippers was sustained once irregular availment of credit was found, but the redemption fine was reduced as excessive on the facts. The appeal succeeded only to the extent of deletion of penalty and reduction of redemption fine, while denial of credit and confiscation were maintained.

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Issues: (i) Whether Cenvat credit on tippers used for providing site formation and allied services was admissible as capital goods; (ii) whether penalty was sustainable; (iii) whether confiscation of the tippers and the quantum of redemption fine were justified.

Issue (i): Whether Cenvat credit on tippers used for providing site formation and allied services was admissible as capital goods.

Analysis: The claim to credit was examined in light of the settled view that tippers used during the relevant period did not satisfy the definition of capital goods for the purpose of Cenvat credit. Following the earlier decision on an identical issue, the vehicles were treated as ineligible for credit.

Conclusion: The Cenvat credit on tippers was held to be inadmissible.

Issue (ii): Whether penalty was sustainable.

Analysis: The matter was considered in the context of the prevailing bona fide view during the relevant period that credit on such vehicles could be claimed. Applying the same reasoning as in the earlier decision, the case was treated as one where penal consequences were not warranted.

Conclusion: The penalty was set aside.

Issue (iii): Whether confiscation of the tippers and the quantum of redemption fine were justified.

Analysis: Once the credit was found to have been irregularly availed, confiscation was upheld. However, the redemption fine was found to be excessive on the facts and circumstances, warranting reduction.

Conclusion: Confiscation was upheld and the redemption fine was reduced.

Final Conclusion: The appeal succeeded only to the extent of deletion of penalty and reduction of redemption fine, while the denial of Cenvat credit and confiscation were sustained.

Ratio Decidendi: Where goods do not qualify as capital goods for Cenvat credit during the relevant period, credit is inadmissible, but penalty may be excluded if the dispute was capable of a bona fide view; confiscation can still be sustained with moderation of redemption fine.

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