Tribunal allows appeal, grants credit for duty paid on MS items for capital goods

The Tribunal allowed the appeal, setting aside the impugned order disallowing the credit of duty paid on MS items used as support structures for capital goods by the appellants. The Tribunal found no willful suppression of facts and considered the Chartered Engineers Certificate provided by the appellant as evidence of legitimate usage. The department's contention regarding the use of MS items for canteen sheds in a previous period was refuted with documentary evidence. The Tribunal held that the disallowance of credit was unjustified based on precedents and allowed the appeal with consequential reliefs, if any.

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Issues: Disallowance of credit of duty paid on MS items.

In this case, the appellants, who are manufacturers of Bulk Drugs and Intermediaries, availed CENVAT credit on MS Angles, Channels, Aluminium Rolls, HR Coils, etc., during the period April 2005 to October 2008. The original authority confirmed the demand for recovery of the amount along with interest and imposed a penalty, which was upheld by the Commissioner (Appeals). The appellant argued that the MS items were used as support structures for various equipment and provided a Chartered Engineers Certificate to establish their usage. The appellant contended that the Show Cause Notice was issued beyond the normal period and there was no willful suppression of facts. The Ld. AR reiterated the findings in the impugned order. The Tribunal noted that the period involved was prior to 07.07.2009 and considered the Chartered Engineers Certificate provided by the appellant, which detailed the use of MS items for support structures for capital goods. The Tribunal found no evidence of willful suppression of facts and allowed the appeal, setting aside the impugned order.

The department alleged that the MS items were also used for canteen sheds, which was disallowed in an earlier period. However, the appellant demonstrated through documents that MS items were not used for canteen sheds in the present period. The Tribunal observed that the Show Cause Notice seemed to have been issued based on a judgment in the case of Vandana Global Ltd. The Tribunal referred to various case laws, including judgments in the cases of Mundra Ports & SEZ Ltd., A.P.P Ltd., and India Cements Ltd., which supported the eligibility of MS items used for the erection of capital goods for credit. The Tribunal concluded that the disallowance of credit was unjustified based on the evidence presented and allowed the appeal with consequential reliefs, if any.

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