2017 (3) TMI 504 - AT - Central Excise

Disallowed credit on capital goods upheld due to invoice discrepancies and tariff classification.

Bhima Sahakari Sakhar Karkhana Versus Commissioner of Central Excise, Pune-III

The Tribunal upheld the lower authorities' decision to disallow credit on capital goods due to discrepancies in invoice descriptions. The disputed items ... CENVAT credit - Angles, Channels, Centrally twisted de form bars and other items used for construction of factory shed, building or laying of foundation - denial on the ground that the description of invoices shows these items to be structural items whereas party has claimed that these items are fitting of pipes and tubes - Held that: - As the goods have been cleared already, the only documents indicating their nature are invoices, which not only provide description but also headings and sub-headings of the impugned goods - There is no hint or indication in the invoice or any other document to show that the impugned goods were fittings of tubes and pipes - In the absence of any evidence to prove that the items mentioned in the Annexure A to SCN were fittings of tubes and pipes and in the absence of any details about end use of these materials, the description and tariff headings given in the invoices have rightly been relied upon by lower authorities - these items do not fall in the definition of the Capital Goods nor as inputs for Capital Goods - demand upheld. Extended period and penalty also rightly imposed relying in the decision in the case of CCE, Ghaziabad Vs. Rathi Steel & Power Ltd. [2015 (5) TMI 168 - ALLAHABAD HIGH COURT]. Appeal dismissed - decided against appellant. Issues:Disallowed credit on capital goods due to irregularities in description on invoices.Analysis:The appeal was filed against the Order-in-Appeal disallowing credit on capital goods due to discrepancies in the description on invoices. The dispute arose from the classification of items like Angles, Channels, and Centrally twisted de form bars as either structural items or fittings of pipes and tubes. The appellant accepted part of the demand, reducing the disputed amount. The advocate argued that the department relied solely on tariff headings, disregarding actual end use, claiming the items were parts of tubes and pipes, falling under the definition of capital goods.The Revenue, represented by the Ld. AR, pointed out that invoices clearly labeled the items as structural materials, citing relevant tariff numbers from Chapter 73, which they argued did not qualify as capital goods. Reference was made to various judgments supporting this stance. The Tribunal examined the invoices and noted the detailed descriptions provided, including headings and sub-headings, emphasizing that the nature of the items was crucial. The Tribunal rejected the appellant's argument to consider end use based on oral submissions alone, highlighting the lack of evidence supporting the claim that the items were fittings of tubes and pipes.The Tribunal upheld the lower authorities' reliance on invoice descriptions and tariff headings, concluding that the disputed items did not meet the definition of capital goods or inputs for capital goods. Citing the Vandana Global Ltd. case, it reiterated that certain materials like foundation items cannot be considered inputs for capital goods. The demand was deemed justified, and interest was upheld as compensatory. Regarding penalties, a precedent was cited where willful suppression of facts led to penalty imposition, justifying the extended period of limitation. Ultimately, the Commissioner (Appeals) order was upheld, and the appeal was dismissed.