2024 (2) TMI 1156 - AT - Central Excise

CENVAT credit allowed on plates used for capital goods manufacturing despite immovable property conversion under Rule 2(k)

CESTAT Ahmedabad allowed the appeal, setting aside the denial of CENVAT credit on HR, MS and SS plates used during 2003-2005 for Copper III plant setup. ... Denial of CENVAT Credit - inputs/capital goods or not - HR, MS and SS plates received and utilized during 2003 to 2005 for setting up of Copper III plant - impugned order has disallowed such Cenvat credit on the ground that the plant and machinery so fabricated, are immovable and fixed to earth and cannot be called 'capital goods' - HELD THAT:- There is no restriction in Rule 2(k) of Cenvat Credit Rules, 2004, for the availment of the Cenvat credit of the duty paid on goods used for manufacture of capital goods. All that the said rule requires is whether such capital goods are used for manufacture of excisable goods in the factory. Once this requirement is satisfied, the fact that such capital goods came into existence as an immovable property is irrelevant or immaterial to avail Cenvat Credit. The Appellants have used MS and SS plates used in the fabrication of chimneys. Chimneys are pollution control equipment and are thus specified capital goods under sub-clause (ii) of clause (A) of the definition of 'capital goods' under Rule 2(a) of the Cenvat Credit Rules, 2004. The Hon'ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING & WEAVING MILLS LTD. [2010 (7) TMI 12 - SUPREME COURT] has examined the issue of eligibility of Cenvat credit availed on MS plates items used in the fabrication of chimneys. The Hon'ble Supreme Court has held that, once it is not under dispute that the impugned items are used in the fabrication of chimneys, Cenvat credit availed on the same cannot be denied. Thus, ground in impugned order is also rejected. Iron and steel items used in the fabrication of supporting structures for capital goods - HELD THAT:- Cenvat credit has been denied on iron and steel items used in the fabrication of supporting structures for capital goods is eligible. The Appellants have availed Cenvat credit on H.R. M.S. & S.S. plates used in the fabrication of supporting structures of capital goods. There are cetena of decision wherein it has been held that the credit of steel used to support capital goods is eligible for credit. Denial of credit on account of an inordinate delay in availing Cenvat credit in violation of Rule 4(1) of the Cenvat Credit Rules, 2002 and/or 2004 - HELD THAT:- There is no specific time limit prescribed for availment of Cenvat credit on inputs under Rule 4(1) of the Cenvat Credit Rules. The sub-rule which prescribes that 'CENVAT credit in respect of inputs may be taken immediately' in Rule 4(1) makes it clear that the said provision is an enabling provision and enables the assessee to avail Cenvat credit immediately on receipt of the inputs. There are no merit in the impugned order. The same is set aside and the appeal is allowed. Issues Involved:1. Denial of Cenvat credit on HR, MS, and SS plates.2. Consideration of Chartered Engineer's certificate.3. Classification of fabricated items as capital goods or inputs.4. Timeliness of availing Cenvat credit.5. Applicability of Board Circular dated 15.01.2002.Summary:1. Denial of Cenvat Credit on HR, MS, and SS Plates:The appeal by M/s. Hindalco Industries Limited challenges the denial of Cenvat credit on HR, MS, and SS plates used in the fabrication of various items such as chimneys, ducts, machinery, pipes, support structures, and storage tanks. The tribunal noted that these plates were used in the manufacture of capital goods and thus qualify for Cenvat credit as inputs under Rule 2(k) of the Cenvat Credit Rules, 2004.2. Consideration of Chartered Engineer's Certificate:The tribunal previously remanded the case, directing the adjudicating authority to reconsider the Chartered Engineer's certificate. The Commissioner, however, summarily rejected the certificate without providing new grounds, which the tribunal found inadequate and against its earlier directions.3. Classification of Fabricated Items as Capital Goods or Inputs:The tribunal examined the definitions under Rule 2(a) and Rule 2(k) of the Cenvat Credit Rules, 2004. It concluded that items like storage tanks, chimneys, and pipes, fabricated using HR, MS, and SS plates, qualify as capital goods. The tribunal cited multiple precedents supporting the eligibility of Cenvat credit for such items, rejecting the Commissioner's reasoning that immovable property cannot be considered capital goods.4. Timeliness of Availing Cenvat Credit:The tribunal addressed the issue of delay in availing Cenvat credit, noting that Rule 4(1) of the Cenvat Credit Rules does not prescribe a specific time limit. It referenced several decisions affirming that there is no time limit for availing Cenvat credit, thus rejecting the Commissioner's stance on this ground.5. Applicability of Board Circular dated 15.01.2002:The tribunal found that the reliance on the Board Circular dated 15.01.2002 by the Commissioner was misplaced. The circular pertains to the classification of goods for excise duty purposes and does not impact the eligibility of Cenvat credit under the Cenvat Credit Rules.Conclusion:The tribunal set aside the impugned order, allowing the appeal and granting Cenvat credit to M/s. Hindalco Industries Limited. The decision was pronounced in open court on 22.02.2024.