SAIL-RSP & SAIL-RFP: One Entity for CENVAT Credit. Extended Limitation Not Applicable. Appeal Allowed.

The Tribunal held that SAIL-RSP and SAIL-RFP are not separate units but part of the same legal entity. It allowed the availment of CENVAT Credit by RSP for capital goods used in RFP, stating the extended period of limitation was not invokable due to the department's prior knowledge. Rule 8 of the CENVAT Credit Rules was deemed inapplicable, and the impugned orders were set aside, with the appeal allowed for the Appellant.

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Issues Involved:
1. Whether SAIL-RSP and SAIL-RFP are separate units for the purpose of CENVAT Credit Rules.
2. Whether the availment of CENVAT Credit by RSP for capital goods used in RFP is permissible.
3. Applicability of Rule 8 of the CENVAT Credit Rules, 2002.
4. Whether extended period of limitation is invokable.

Detailed Analysis:

1. Whether SAIL-RSP and SAIL-RFP are separate units for the purpose of CENVAT Credit Rules:
The Tribunal found that SAIL-RSP and SAIL-RFP are not separate units but part of the same legal entity, Steel Authority of India Limited, Rourkela Steel Plant, having the same PAN and located within the same premises. The Rourkela Fertilizer Plant (RFP) was simply a division of RSP and had no independent existence. The Tribunal cited the definition of "factory" under Section 2(e) of the Central Excise Act, 1944, which includes any premises where excisable goods are manufactured. It was held that different plants within the same premises constitute one factory, as supported by the case of Dhampur Sugar Mills Ltd. Vs. CCE Meerut.

2. Whether the availment of CENVAT Credit by RSP for capital goods used in RFP is permissible:
The Tribunal held that the availment of CENVAT Credit by RSP for capital goods used in RFP was permissible. The capital goods were in the nature of components, spares, and accessories, and thus, the condition of possession and use under Rule 4(2)(b) of the CENVAT Credit Rules was not applicable. The Tribunal relied on the Order-in-Original dated 28.04.2016, which had allowed the credit and had attained finality.

3. Applicability of Rule 8 of the CENVAT Credit Rules, 2002:
The Tribunal found that Rule 8 of the CENVAT Credit Rules, 2002, which deals with the transfer of CENVAT Credit in cases of factory relocation, merger, etc., was not applicable in this case. The Tribunal noted that the Show Cause Notice did not allege the applicability of Rule 8, and the grounds of appeal and the impugned order had traveled beyond the scope of the Show Cause Notice, violating the principles of natural justice.

4. Whether extended period of limitation is invokable:
The Tribunal held that the extended period of limitation was not invokable. The department was aware of the availment of the disputed credit as early as August 2004, and the Show Cause Notice was issued only on 19.11.2007. The Tribunal cited the case of Anand Nishikawa Co.Ltd. v. CCE, Meerut, where it was held that when facts were known to both parties, it does not amount to suppression. The Tribunal also noted that the audit para on which the issue was based had been dropped by AG (Odisha), rendering the proceedings non est.

Conclusion:
The Tribunal set aside the impugned orders and allowed the appeal filed by the Appellant with consequential relief, as per law. The decision emphasized that SAIL-RSP and SAIL-RFP are part of the same legal entity, and the availment of CENVAT Credit by RSP for capital goods used in RFP was in accordance with the law. The extended period of limitation was not applicable due to the department's prior knowledge of the facts.

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