Cenvat credit on fabrication materials for machinery held admissible; extended limitation unavailable absent suppression in records.

Cenvat credit on C.R. coils, H.R. coils, M.S. plates, channels, angles and welding electrodes used to fabricate machinery, parts of capital goods and supporting structures within the factory was treated as admissible under Rule 2(k) of the Cenvat Credit Rules, 2004, because such goods were used in genuine fabrication of capital goods and the earlier Larger Bench view had been set aside. The extended period of limitation was found unavailable because the credit was disclosed in statutory records and monthly returns, and no suppression with intent to evade duty was established. The resulting disallowance and demand were set aside.

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Issues: (i) whether Cenvat credit on C.R. Coils, H.R. Coils, M.S. Plates, Channels, Angles and welding electrodes used in fabricating machinery and supporting structures within the factory was admissible; (ii) whether the extended period of limitation could be invoked to deny the credit.

Issue (i): Whether Cenvat credit on C.R. Coils, H.R. Coils, M.S. Plates, Channels, Angles and welding electrodes used in fabricating machinery and supporting structures within the factory was admissible.

Analysis: The disputed goods were found to have been used for fabricating support of machinery and parts of capital goods within the factory. The earlier Larger Bench view relied upon in the impugned order had been set aside, and the credit was considered in light of the settled position that such goods, when used in fabrication of capital goods, qualify as inputs under Rule 2(k) of the Cenvat Credit Rules, 2004. The credit was therefore held to be allowable.

Conclusion: The credit was admissible and the disallowance was unsustainable.

Issue (ii): Whether the extended period of limitation could be invoked to deny the credit.

Analysis: The credit availed was reflected in statutory records and monthly returns, and the Department did not establish suppression of facts with intent to evade duty. In these circumstances, invocation of the extended period was not justified.

Conclusion: The extended period of limitation could not be invoked.

Final Conclusion: The disallowance of credit and the associated demand were set aside, and the appellant was granted the relief flowing from the allowance of the appeal.

Ratio Decidendi: Goods used in the fabrication of machinery or capital goods within the factory can qualify as inputs for Cenvat credit when the facts show genuine use and the statutory records disclose the credit, and the extended period cannot be invoked absent suppression with intent to evade.

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