CENVAT credit on steel goods for machinery fabrication upheld; demand also failed for absence of suppression and extended limitation

CENVAT credit on steel goods used for fabrication of conveyor systems, overhead cranes and other machinery was held admissible because the records showed the items were used in plant and machinery, and the exclusion introduced from 07.07.2009 did not apply to the 2007 period. The earlier Larger Bench view could not prevail in light of the later High Court decision relied upon in the order. The demand was also held time-barred because the show-cause notice issued in 2012 for a March 2007 period was unsupported by any finding of suppression of facts or mala fide intention, so the extended limitation period was unavailable to the Revenue.

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Issues: (i) Whether CENVAT credit was admissible on steel goods used in the manufacture and fabrication of conveyor systems, overhead cranes and other machinery. (ii) Whether the demand was barred by limitation and the extended period could be invoked.

Issue (i): Whether CENVAT credit was admissible on steel goods used in the manufacture and fabrication of conveyor systems, overhead cranes and other machinery.

Analysis: The credit dispute concerned steel items such as round channels, flat bars, mill plates, angles, MS beams, MS bars, plates and HR coils. The use of these items was verified from the records and found to be for fabrication of plant and machinery. The period involved was 2007, and the exclusion introduced from 07.07.2009 was held inapplicable. The earlier Larger Bench view could not be pressed into service in view of the later High Court decision relied upon in the order.

Conclusion: CENVAT credit was admissible, and this issue was decided in favour of the assessee.

Issue (ii): Whether the demand was barred by limitation and the extended period could be invoked.

Analysis: The show-cause notice was issued in 2012 for a period in March 2007. The record did not justify a finding of suppression of facts or mala fide intention. In the circumstances, the extended limitation period was not available to the Revenue.

Conclusion: The demand was time-barred, and this issue was decided in favour of the assessee.

Final Conclusion: The assessee succeeded on both merits and limitation, and the Revenue's appeal failed.

Ratio Decidendi: Where steel items are shown to have been used for fabrication of machinery or capital goods during a period preceding the relevant exclusion, CENVAT credit is admissible, and in the absence of suppression or mala fide, the extended period of limitation cannot be invoked.

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