2025 (2) TMI 893 - AT - Central Excise

Captive mines can function as Input Service Distributors under CENVAT Credit Rules for valid credit distribution to manufacturing units.

M/s. Steel Authority of India Limited Versus The Commissioner Central Excise & Service Tax, Bolpur

CESTAT Kolkata held that captive mines can function as Input Service Distributors under CENVAT Credit Rules, allowing valid credit distribution to ... Irregular availment of CENVAT Credit - credit of inputs, input services and capital goods used in captive mine of the appellant, Bolani Mines has been correctly availed by the appellant at its Durgapur Steel Plant and correctly utilised in or in relation to manufacture of dutiable final products therein or not? - CENVAT Credit availed and utilised by the appellant against the ISD documents issued by the Bolani Mines was legal and valid - Bolani Mines can be termed as Input Service Distributor under Rule 2(l) of the CENVAT Credit Rules. HELD THAT:- The issues involved is no more res integra, as this Tribunal has already decided these issues in favour of the appellant in their own cases, with respect to the companies located at other places and for different periods - The credit disallowed along with interest and the penalties imposed in the impugned order are not sustainable. Conclusion - The distribution of credit by captive mines as ISD was in accordance with the law, and the credits disallowed in the impugned order were not sustainable. The appeals filed by the appellants /SAIL are allowed. The issues presented and considered in the judgment are as follows:1. Whether the credit of inputs, input services, and capital goods used in the captive mine of the appellant, Bolani Mines, was correctly availed and utilized at its Durgapur Steel Plant in relation to the manufacture of dutiable final products.2. Whether the CENVAT Credit availed and utilized against ISD documents issued by Bolani Mines was legal and valid, and whether Bolani Mines can be considered an Input Service Distributor under Rule 2(l) of the CENVAT Credit Rules.Detailed Analysis:The Tribunal considered the appeals filed by Steel Authority of India (SAIL) against the Order-in-Original passed by the Commissioner of Customs, Central Excise & Service Tax Durgapur Commissionerate. The appeals involved allegations of irregularly availed CENVAT Credit and imposition of penalties. The Tribunal reviewed multiple show cause notices and orders disallowing CENVAT Credits and imposing penalties on SAIL.The key issue revolved around the correctness of availing and utilizing credits related to inputs, input services, and capital goods in the captive mine of Bolani Mines. SAIL contended that previous decisions by the Tribunal favored them on similar issues. The Tribunal referenced past decisions in favor of SAIL, highlighting that the distribution of credit by captive mines as ISD was in accordance with the law.The Tribunal found that the credits disallowed, along with penalties and interest, were not sustainable based on the legal entity's engagement in the manufacture of dutiable goods. The Tribunal held that the distribution of credit by captive mines as ISD was legally tenable. Consequently, the demands of service tax, interest, and penalties confirmed in the impugned order were set aside, and the appeals filed by SAIL were allowed with consequential relief.Significant Holdings:The Tribunal established that the distribution of credit by captive mines as ISD was in accordance with the law, and the credits disallowed in the impugned order were not sustainable. Therefore, the appeals filed by SAIL were allowed, and the appeal filed by the Revenue was rejected.In conclusion, the Tribunal ruled in favor of SAIL, setting aside the demands of service tax, interest, and penalties imposed, and allowed the appeals with consequential relief. The decision highlighted the legality and validity of the CENVAT Credits availed and utilized against ISD documents issued by Bolani Mines.