Appellant wins case on disputed capital goods credit eligibility, Tribunal grants relief

The Tribunal ruled in favor of the Appellant in a case concerning disputed capital goods credit. The Appellant successfully argued that the credit availed pertained not only to cement and steel items but also to plant, machinery, and equipment, qualifying as capital goods. Additionally, the Tribunal accepted that the disputed items, when used in fabricating storage tanks, were eligible for Cenvat credit as inputs, despite the insertion of Explanation 2 in July 2009. Consequently, the Tribunal allowed the appeal on merits, providing relief to the Appellant on 16 December 2020.

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Issues:
1. Whether the disputed capital goods credit availed during 2010-11 to 2012-13 pertained solely to cement and steel items under Chapter 72/73 of the Central Excise Tariff Act.
2. Whether Cenvat credit on cement and steel items was unavailable due to Explanation 2 to the definition of inputs from 7 July 2009.

Analysis:

Issue 1:
The Appellant contested the Order claiming that the disputed credit did not solely relate to cement and steel items. They argued that a significant portion of the credit was for plant, machinery, and equipment under Chapter 84, 85 & 90, explicitly covered as capital goods. The Appellant provided detailed documentation and a Chartered Accountant Certificate to support this claim. The Tribunal found merit in this argument, acknowledging that a substantial amount of the credit was indeed for items beyond cement and steel, thus ruling in favor of the Appellant on this aspect.

Issue 2:
Regarding the availability of Cenvat credit on cement and steel items, the Appellant presented a Certificate from a Chartered Engineer confirming the use of disputed items in fabricating storage tanks, a capital goods category. The Tribunal noted that the adjudicating authority failed to refute this certificate or provide evidence contradicting the Appellant's claim. Citing legal precedents and the Karnataka High Court decision in the SLR Steels case, the Tribunal concluded that the disputed items, when used in fabricating storage tanks, qualified for credit as inputs, even after the insertion of Explanation 2 in July 2009. Consequently, the Tribunal ruled in favor of the Appellant on this issue as well.

In light of the above analysis, the Tribunal allowed the appeal on merits, refraining from addressing the limitation argument. The decision was pronounced in favor of the Appellant on 16 December 2020, providing consequential relief as applicable.

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