2018 (1) TMI 50 - HC - Central Excise

Court rules in favor of assessee on Cenvat Credit eligibility for construction materials

Commr. of C. Ex. & Service Tax, Tiruchirapalli Versus CESTAT, Chennai

The High Court dismissed the appeal against the Revenue regarding the eligibility of credit under Cenvat Credit Rules, 2004 for duty paid on steel and ... CENVAT credit - interpretation of the words 'input' and 'capital goods' - Held that: - similar substantial question of law decided in the case of M/s. Thiru Arooran Sugars, M/s. Dalmia Cements (Bharat) Ltd. Versus Customs, Excise and Service tax Appellate Tribunal, The Commissioner of Central Excise [2017 (7) TMI 524 - MADRAS HIGH COURT], where it was held that Rule 2k(i). Explanation 2 cannot be read in a manner that it constricts, the scope and ambit of the main provision, i.e., Rule 2k(i) - appeal dismissed - decided against Revenue. Issues involved:1. Interpretation of eligibility for credit under Cenvat Credit Rules, 2004 for duty paid on steel and cement used in construction of storage tanks.2. Varying interpretation of the terms 'input' and 'capital goods' in different legal decisions.Analysis:1. The first issue in this case revolves around the eligibility of credit under Cenvat Credit Rules, 2004 for duty paid on steel and cement used in construction of storage tanks. The appellant challenged the reliance placed by the Tribunal on a decision of the Karnataka High Court, arguing that the Apex Court had previously defined goods as items that can be bought and sold in the market. The appellant also cited a case where it was held that items fixed to earth are not excisable and do not qualify as inputs or capital goods. However, the High Court noted that similar issues had been addressed in previous decisions, including one where similar substantial questions of law were decided in favor of the assessee and against the Revenue. Consequently, following the precedent set by these decisions, the High Court dismissed the appeal against the Revenue.2. The second issue pertains to the varying interpretation of the terms 'input' and 'capital goods' in different legal decisions. The Hon'ble Division Bench of the High Court had previously answered similar substantial questions of law in favor of the assessee and against the Revenue in a different case. The Court also referred to another case where similar substantial questions of law were considered. Based on the consistent interpretation provided in these cases, the High Court dismissed the current appeal against the Revenue, aligning with the decisions that favored the assessee. Consequently, the High Court upheld the interpretation of the terms 'input' and 'capital goods' as per the precedent set by previous judgments.