Tribunal decisions on CENVAT credit fraud and eligibility for credit

The Tribunal set aside the penalty imposed on the appellant for availing CENVAT credit fraudulently due to lack of specific allegations. In another appeal, the Tribunal upheld the CENVAT credit on structural items and service tax paid on input services, ruling that they were eligible for credit as they were used for fabrication of capital goods and support structures. The Tribunal referenced legal precedents and Circulars to support its decision, ultimately disposing of both appeals by setting aside the penalty in the first case and upholding the CENVAT credit in the second case.

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Issues:
1. Imposition of penalty on the appellant for availing CENVAT credit fraudulently.
2. Disallowance of CENVAT credit on structural items and service tax paid on input services.

Issue 1: Imposition of penalty on the appellant for availing CENVAT credit fraudulently:
In appeal No.E/22682/2004, the appellant was penalized for availing CENVAT credit of &8377; 5,76,896, alleged to be fraudulently done to evade Central Excise duty. The adjudicating authority found an arithmetical error and an error of judgment in the double credit taken. However, the penalty imposed under Rule 15(2) of the CENVAT Credit Rules, 2004 was set aside due to the absence of specific allegations as required by law. The judgment referenced the case of Rajasthan Spinning and Weaving Mills to support the decision to uphold the duty liability but set aside the penalty.

Issue 2: Disallowance of CENVAT credit on structural items and service tax paid on input services:
In appeal No.E/23436/20014, the Revenue challenged the dropping of demands for disallowing CENVAT credit on structural items like MS angles, beams, plates, and service tax paid on input services for construction activities. The Revenue argued that these items were not eligible for credit as they were not capital goods or inputs per se. However, the Tribunal found that the items were used for fabrication of capital goods and support structures, making them eligible for CENVAT credit. The judgment referred to precedents and Circulars to support the decision. Regarding input services, the Tribunal upheld the credit availed for setting up the factory premises, citing Rule 2(l) of the CENVAT Credit Rules, 2004. The judgment referenced previous cases and authoritative pronouncements to reject the Revenue's appeal and uphold the CENVAT credit on both structural items and input services.

In conclusion, the Tribunal disposed of both appeals by setting aside the penalty in the first case and upholding the CENVAT credit on structural items and input services in the second case, based on detailed legal analysis and precedents.

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