CESTAT Upholds Decision Allowing Cenvat Credit on Capital Goods

The Appellate Tribunal CESTAT, Bangalore upheld the Commissioner (Appeals)' decision allowing the respondent to avail cenvat credit on capital goods based on the supplier's classification under Chapter 84. The burden of proof for admissibility of credit was placed on the manufacturer or service provider, and the recipient could not dispute the supplier's classification. The revenue's appeal was rejected, affirming the legality of granting credit to the respondent.

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Issues involved:
The issues involved in this case are the classification of goods under different chapters of the Central Excise Tariff Act, 1985, the eligibility of availing cenvat credit on capital goods, burden of proof regarding admissibility of cenvat credit, and the impact of supplier's classification on the recipient's credit.

Classification of Goods:
The revenue contended that the respondent received items falling under Chapter 72 but claimed cenvat credit under Chapter 84. The Commissioner (Appeals) allowed the credit, stating that once items are cleared under Chapter 84 by the supplier, the recipient's eligibility for credit cannot be denied.

Burden of Proof for Cenvat Credit:
The revenue argued that the burden of proof regarding the admissibility of cenvat credit lies with the manufacturer or service provider. They claimed that the respondent should not have taken credit on goods mis-declared by suppliers.

Impact of Supplier's Classification:
The respondent received items for a boiler under Chapter 84 as per supplier's documents. The Tribunal referenced a Supreme Court decision, stating that the recipient cannot dispute the classification determined by the manufacturer. The Tribunal upheld the Commissioner (Appeals) decision, confirming the legality of allowing the credit.

In conclusion, the Appellate Tribunal CESTAT, Bangalore upheld the decision of the Commissioner (Appeals) regarding the eligibility of cenvat credit on capital goods based on the supplier's classification. The burden of proof for admissibility of credit lies with the manufacturer or service provider, and the recipient cannot dispute the classification determined by the supplier. The appeal filed by the revenue was rejected, affirming the legality of allowing the credit to the respondent.

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