2023 (11) TMI 1028 - AT - Central Excise

CESTAT Mumbai grants CENVAT credit on iron steel products for plant fabrication and dumpers for windmill maintenance services

Commissioner of Central Excise & Service Tax Large Taxpayer Unit, Mumbai Versus ACC Ltd.

CESTAT Mumbai allowed appellant's claim for CENVAT credit on iron and steel products used for plant fabrication and installation, ruling that exclusion of ... Recovery of CENVAT Credit alongwith interest and penalty - procurement of items of iron and steel which were used for ‘fabrication’ and ‘erection and installation’ of plant - HELD THAT:- The issue of eligibility of products of iron and steel used for, or in relation to, manufacture of ‘capital goods’ or for fixing of capital goods came to be excluded from availment of credit only with effect from 7th July 2009 and the present dispute pertains to the period prior to 19th August 2008. The original decision of the Tribunal in re Vandana Global Ltd [2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT], confirming the retrospective application of the amendment, has since been discarded by the Hon'ble High Court of Chhattisgarh. Accordingly, the first appellate authority was correct in determining the eligibility for CENVAT credit on products of iron and steel. The decision of the Hon'ble Supreme Court in re Saraswati Sugar Mills [2011 (8) TMI 4 - SUPREME COURT], cited by Learned Authorised Representative, would not apply to the facts relating to availment of CENVAT credit. Cenvat Credit on Dumpers used to provide services as ‘annual maintenance contract’ for ‘windmills’ - HELD THAT:- The original authority was not correct in determining the ineligibility for CENVAT credit on ‘dumpers’ and supplies relating to. The sole ground for denial of credit on ‘annual maintenance contract’ service is that these are not used directly in manufacture of excisable goods and that ‘windmills’ themselves are not finished products liable to duties of central excise. There are no merit in the appeal of Revenue which is dismissed. Issues involved:The appeal pertains to the disallowance of CENVAT credit and the subsequent recovery of the same along with penalty under CENVAT Credit Rules 2004.Details of the judgment:1. The Revenue appealed against the disallowance of CENVAT credit amounting to Rs. 56,05,486 availed by the respondent, a cement manufacturer, during 2002-08. The original authority upheld the disallowance, which was set aside in appeal, leading to the current appeal. 2. The Revenue contended that certain items of iron and steel used for fabrication and installation of a plant were not excisable, relying on circulars and legal precedents. Additionally, credit availed on accessories and supplies for dumpers was disputed, citing rule violations and retrospective application of notifications. The eligibility of credit for annual maintenance contracts for windmills was also challenged based on manufacturing criteria.3. The respondent argued citing High Court and Tribunal decisions supporting the eligibility of structures used for capital goods under CENVAT credit. They also highlighted inconsistencies in the Revenue's contentions regarding dumpers and transportation supplies, asserting the essential role of such equipment in the manufacturing process.4. The Tribunal referred to previous rulings allowing credit for material handling equipment as capital goods, emphasizing the integral connection of such equipment with manufacturing operations.5. Regarding annual maintenance contracts for windmills, the Tribunal considered the broader interpretation of input services under CENVAT rules, citing relevant legal precedents that supported the eligibility of services received outside factory premises.6. The Tribunal ruled in favor of the respondent, rejecting the Revenue's arguments on the eligibility of CENVAT credit for iron and steel products, dumpers, and annual maintenance contracts for windmills. The decision was based on the retrospective application of amendments and the broad definition of input services under CENVAT rules.7. The Tribunal concluded that the Revenue's appeal lacked merit and dismissed it, upholding the eligibility of CENVAT credit for the disputed items. The decision was pronounced in open court on 22/11/2023.