2020 (2) TMI 963 - AT - Central Excise

Tribunal grants Cenvat credit for setting up new factory, emphasizing actual utilization in manufacturing process.

The Tribunal allowed the appeal, holding that the appellant was entitled to avail Cenvat credit on steel items and input services for setting up a new ... CENVAT Credit - input - steel items - cement - input services - sole reason for denial of Cenvat credit is the decision of the Larger Bench of this Tribunal in the case of VANDANA GLOBAL LTD. VERSUS CCE [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] - HELD THAT:- Admittedly, the said decision has been turned down by the Hon’ble Chattisgarh High Court in M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT] - therefore, the decision of the Larger Bench of this Tribunal holds no force and hence, Cenvat credit cannot be denied based on the decision of Larger Bench of this Tribunal in the case of Vandana Global Ltd - Admittedly, it is not disputed that the cement and steel items have been used by the appellant for setting up new factory or capital goods - credit allowed. CENVAT Credit- input services - services received by the appellant at the factory for setting up a new factory - sole denial of Cenvat credit to the appellant is that the appellant has received services in their factory and invoices are in the name of their Nandyal office - HELD THAT:- It is not the case of the revenue that the appellant has not used the services in question in course of business of manufacturing of goods. Therefore, in terms of Rule 2(l) of CCR, 2004 the appellant is entitled to avail Cenvat credit as held by the Hon’ble Bombay High Court in the case of CCE, NAGPUR VERSUS ULTRATECH CEMENT LTD., [2010 (10) TMI 13 - BOMBAY HIGH COURT] - also the invoices in question for availment of input service are having all the particulars in terms of Rule 9(2) of CCR, 200, but having certain corrections which cannot be reason to deny Cenvat credit - credit allowed. Appeal allowed - decided in favor of appellant. Issues Involved:1. Entitlement to Cenvat credit on steel items and input services for setting up a new factory.2. Denial of Cenvat credit based on the location of invoices and alterations in documents.Issue (a):The appellant appealed against the denial of Cenvat credit on steel items and input services for setting up a new factory. The denial was based on the decision of a Larger Bench, which was subsequently overruled by the Hon'ble Chattisgarh High Court. The Tribunal emphasized the necessity of a user test to determine if the items were used for fabricating capital goods, as essential for manufacturing activities. Referring to precedents like the case of Singhal Enterprises Pvt Ltd, the Tribunal concluded that the appellant was entitled to avail Cenvat credit on inputs and input services used in the fabrication of capital goods, thereby setting aside the impugned order.Issue (b):The denial of Cenvat credit on input services was primarily due to the discrepancy in the location of invoices, being in the name of the appellant's Nandyal office instead of the factory. However, it was established that the services were indeed utilized in the manufacturing process. Citing the Rule 2(l) of CCR, 2004 and the decision of the Hon'ble Bombay High Court in the case of Ultratech Cements Ltd, the Tribunal ruled in favor of the appellant's entitlement to avail Cenvat credit on input services. The Tribunal also noted that minor corrections in the invoices should not be a valid reason to deny Cenvat credit. Consequently, the Tribunal held that the appellant should not be denied Cenvat credit on the disputed inputs and input services.In conclusion, the Tribunal found no merit in the impugned order and allowed the appeal with any consequential relief.