Tribunal allows appeal, deems steel credit admissible for manufacturing.

The Tribunal allowed the appeal, setting aside the demand for Cenvat credit on structural steel. The delay in issuing the show cause notice rendered the demand barred by limitation as no suppression was found. The Tribunal deemed the credit on steel items admissible as they were essential for manufacturing activities, falling within the definition of capital goods. The appeal was granted in favor of the appellant, overturning the impugned order.

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Issues Involved:
The appeal challenges the order upholding a demand for Cenvat credit availed on structural steel. The main issue is whether the credit availed by the appellant on structural steel used for various purposes is admissible under the Cenvat credit rules.

Details of the Judgment:

Issue 1: Delay in Issuing Show Cause Notice
The department issued a show cause notice to deny and recover Cenvat credit, invoking the extended period of limitation. The appellant argued that the notice was issued belatedly without justification for the delay. The Tribunal held that the notice should have been issued within one year from the knowledge of the alleged irregularity. Since the appellant had declared the credit in their records and statutory returns, no suppression could be alleged, and the extended period could not be invoked. Therefore, the demand was deemed barred by limitation.

Issue 2: Admissibility of Cenvat Credit on Steel Items
The appellant availed Cenvat credit on various steel items used for supporting structures of machinery and for erecting poles for electricity transmission. The department denied the credit, stating the items were outside the factory premises and not eligible as capital goods. The Tribunal found that the items were essential for manufacturing activities inside the factory, directly related to the production of the final product. Therefore, the credit on these items was deemed admissible under Rule 2(a) of the Cenvat credit rules. The Tribunal also considered the steel items as accessories falling within the definition of capital goods, making the credit availed on them also admissible.

Conclusion:
The Tribunal set aside the demand on both merit and limitation grounds, allowing the appeal with consequential relief as per law. The impugned order was overturned, and the appeal was granted in favor of the appellant.

Separate Judgment:
The judgment was pronounced in open court on 16.03.2023 by Mr. Ajay Sharma, Member (Judicial) of the Appellate Tribunal CESTAT Mumbai.

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