Tribunal allows appeal on Cenvat credit denial for wires & cables

The Tribunal allowed the appeal, setting aside the impugned order that denied Cenvat credit on wires, cables, and refractory as capital goods. The Tribunal held that the items fell under the definition of "Capital goods" and emphasized that the new ground of invoices bearing two addresses, raised by the Commissioner(Appeals), was impermissible as it was not part of the show cause notice. Consequently, the rejection of the appeal based on this new ground was deemed unjustified, leading to the appeal being allowed in favor of the appellant.

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Issues:
1. Denial of Cenvat credit on wires, cables, and refractory as capital goods.
2. Rejection of appeal by Commissioner(Appeals) based on new ground of invoices bearing two addresses.

Issue 1: Denial of Cenvat credit on wires, cables, and refractory as capital goods:
The appellant availed Cenvat credit on wires, cables falling under Chapter 85 and refractory falling under Chapter 69. The adjudicating authority confirmed the demand of Cenvat credit and imposed penalties. The Commissioner(Appeals) rejected the appeal on the grounds that the items were not capital goods and that the invoices indicated two addresses, suggesting the goods were not received in the appellant's factory. The appellant argued that both wires, cables, and refractory fell under the definition of "Capital goods" prevailing at the relevant time. The issue of invoices bearing two addresses was not raised in the show cause notice, and the adjudicating authority did not address this issue. The appellant cited relevant judgments to support their case. The Revenue reiterated the findings of the impugned order, considering the new ground raised by the Commissioner(Appeals) as a subsidiary issue. The Tribunal analyzed the definition of "Capital goods" under the Cenvat Credit Rules, 2004, and concluded that wires, cables, and refractory fell under this definition. The Tribunal emphasized that the issue of invoices bearing two addresses was not raised in the show cause notice, and the Revenue did not investigate this aspect. Citing Supreme Court judgments, the Tribunal held that a new issue cannot be raised post issuance of show cause notice and adjudication order. Therefore, the Tribunal allowed the appeal, setting aside the impugned order.

Issue 2: Rejection of appeal by Commissioner(Appeals) based on new ground of invoices bearing two addresses:
The Commissioner(Appeals) rejected the appeal not only on the grounds of items not being capital goods but also due to invoices bearing two addresses, suggesting the goods were not received in the appellant's factory. The appellant argued that this new ground was not part of the show cause notice and was raised for the first time by the Commissioner(Appeals). The Revenue considered this ground as a subsidiary issue. The Tribunal emphasized that the appellant was not put on notice regarding this issue, and the Revenue failed to investigate whether the capital goods were received and used in the factory based on the two addresses on the invoices. Citing relevant judgments, the Tribunal held that a new issue cannot be introduced post issuance of show cause notice and adjudication order. Therefore, the Tribunal concluded that the denial of Cenvat credit based on this new ground was not justified, and the appeal was allowed.

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