2016 (12) TMI 1375 - AT - Central Excise

Tribunal allows Cenvat credit on structural steel, overruling previous decision.

The Tribunal held that Cenvat credit on structural steel is admissible based on various High Court judgments, overruling the decision in Vandana Global ... CENVAT credit - H.R. Coils, M.S. Channels, Beams, Joists, hot rolled sheets, H.R. Sheet Coils - credit denied placing reliance on the judgment in case of Vandana Global Ltd Vs Commissioner of C.Ex. Raipur [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)], where Hon’ble Larger Bench has taken a view that even prior to 7/7/2009 when the explanation 2 of Rule 2(k) was inserted in the Cenvat credit Rules, 2004, it is clarificatory nature and had retrospective effect. As per the said amendment structural steel was explicitly excluded from the definition of input. Held that: - much water has been flown on the issue as various High courts have either distinguished or overruled, the view taken by the Hon’ble Larger Bench in case of Vandana Global Ltd hence it is no more good law - reliance placed in the decision of the case of Chemplast Sanmar Ltd [2014 (9) TMI 535 - MADRAS HIGH COURT], where it was held that Cenvat credit is admissible on the structural steel, therefore Larger Bench decision in case of Vandana Global Ltd clearly stands distinguished, the entire foundation of the impugned order gets demolished - Cenvat credit is admissible on structural steel in light of the above referred judgments - the limitation aspect ignored. Credit allowed - appeal allowed - decided in favor of assessee. Issues Involved:1. Admissibility of Cenvat credit on structural steel.2. Invocation of the extended period of demand.Detailed Analysis:1. Admissibility of Cenvat Credit on Structural Steel:The appellant, engaged in manufacturing goods under Chapter 72 of the Central Excise Tariff Act, 1985, availed Cenvat Credit on inputs and capital goods under the Cenvat Credit Rules, 2004. During an EA-2000 audit, it was found that the appellant claimed credit for structural steel items such as M.S. Plates, M.S. Channels, M.S. Beams, Joists, and H.R. Coils, which were used as components/spares of machinery/plant (rolling mill) falling under Chapter 8455, thus qualifying as capital goods per Rule 2(a)(A)(iii) of the Cenvat Credit Rules, 2004. The appellant supported this with a Chartered Engineer's certificate stating these items were used for repairing Chimney and Furnace and supporting the Gasifire structure.The lower adjudicating authority confirmed the demand, and the Commissioner (Appeals) upheld this decision, relying on the judgment in Vandana Global Ltd Vs Commissioner of C.Ex. Raipur, which held that Cenvat credit is not admissible on structural steel.The appellant argued that subsequent judgments by various High Courts have distinguished or overruled the Vandana Global Ltd judgment, making it no longer good law. The appellant cited several cases, including Commr. of C. Ex. Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd, which supported the admissibility of Cenvat credit on structural steel.The Tribunal found that the Commissioner (Appeals) denied the credit based on the Vandana Global Ltd decision, but subsequent High Court judgments, such as Mundra Ports & Special Economic Zone Ltd vs. CCE & Cus, clarified that the amendment effective from 7/7/2009 was not retrospective. Therefore, credit on structural steel is admissible for the period before 7/7/2009. The Tribunal cited multiple judgments where High Courts consistently held that Cenvat credit on structural steel is admissible, including India Cements Ltd, Chemplast Sanmar Ltd, and Rajasthan Spinning & Weaving Mills Ltd.2. Invocation of the Extended Period of Demand:The demand covered the period from October 2005 to November 2008, with the show cause notice issued on 03/6/2009, invoking the extended period of demand. The appellant contended that the issue of Cenvat credit on structural steel was highly debatable with various contrary decisions, making the extended period inapplicable. The appellant cited cases such as Commissioner of Central Excise Vs. M/s. Reliance Industries Ltd and Union of India Vs. Bharat Aluminium Co. Ltd., arguing that in cases involving interpretation of law, the extended period should not be invoked.The Revenue, however, argued that as per the Larger Bench decision in Vandana Global Ltd, Cenvat credit on structural steel was not admissible. They cited cases like Bharti Airtel Ltd Vs. Commissioner of Central Excise, Pune-II to support their stance. Regarding the limitation, the Revenue referred to the Allahabad High Court judgment in Commr. of Cus. & C. Ex. Ghaziabad Vs. Rathi Steel & Power Ltd, which stated that the fact of suppression needs to be ascertained, and divergent decisions alone cannot prevent invoking the extended period.Conclusion:The Tribunal concluded that the Cenvat credit on structural steel is admissible based on various High Court judgments that overruled or distinguished the decision in Vandana Global Ltd. The Tribunal decided not to delve into the limitation aspect since the credit was found admissible on merit. Consequently, the impugned order was modified, and the appeal filed by the assessee was allowed.Order Pronounced in Court on 04/07/2016.