2010 (4) TMI 484 - AT - Central Excise

Appellant granted Cenvat credit on Cement and TMT Bars for service providers under 'Storage and Warehousing Services'

The appellant's eligibility for Cenvat credit on Cement and TMT Bars for service providers under 'Storage and Warehousing Services' was disputed. The ... Cenvat credit - Capital goods - input - goods used for providing output service - tubes and pipes and fittings thereof - storage tankCenvat credit - Capital goods - input - storage tank - tubes and pipes and fittings thereof - Entitlement of the appellant to avail Cenvat credit on duty paid on Cement, TMT bars and steel tubes used in construction of storage tanks, reinforcement, column foundations and pipelines for transfer of liquid cargo in provision of storage and warehousing services. - HELD THAT: - The Tribunal examined the definitions of Capital goods and input in the Cenvat Credit Rules and held that the definition of Capital goods expressly includes, inter alia, 'tubes and pipes and fittings thereof' and 'storage tank' when such goods are 'used ... for providing output service.' The definition of input also contemplates goods used in the manufacture of capital goods which are further used in providing the service. Although the appellant is not a manufacturer but a provider of storage and warehousing services, the materials in question (cement, TMT bars and steel tubes) were used for construction of storage tanks and pipelines that constitute capital goods used in providing the output service. Consequently, the duty paid on those goods was eligible for Cenvat credit under the Rules. The Tribunal applied the statutory definitions to the undisputed facts that the items were received and used for construction of tanks, reinforcement and pipelines for conveyance of liquid cargo and concluded that denial of credit was not permissible under the Cenvat Credit Rules. [Paras 6, 7, 8, 9, 10]The appeal is allowed; the Order-in-Appeal is set aside and the appellant is entitled to Cenvat credit on the disputed items.Final Conclusion: The Tribunal allowed the appeal, set aside the order-in-appeal and held that Cenvat credit could be availed on cement, TMT bars and steel tubes used in construction of storage tanks and pipelines for the period April to September, 2005, with consequential relief, if any. Issues:1. Eligibility of Cenvat credit on Cement and TMT Bars for service providers under 'Storage and Warehousing Services.'2. Grounds of limitation in contesting Show Cause Notice.3. Imposition of penalty under Rule 15(1) of the Cenvat Credit Rules, 2004.4. Interpretation of Capital Goods definition.5. Classification of TMT Bars and Cement as inputs.6. Disputed items usage for construction purposes.7. Applicability of Cenvat credit rules for service providers.Analysis:1. The case involved a dispute regarding the eligibility of Cenvat credit on Cement and TMT Bars for service providers under 'Storage and Warehousing Services.' The appellant availed credit, but the lower authorities found them ineligible, leading to a Show Cause Notice for reversal of the amount taken as credit. The appellant contested this notice, including on grounds of limitation. The Commissioner (Appeals) rejected the appeal, leading to this appeal.2. The appellant argued that the items in question are used for manufacturing Capital Goods, thus falling under the definition of Capital Goods eligible for credit. They also contended that the demand was time-barred, as returns indicating credit availed were regularly filed. Citing precedents, they argued against suppression of facts once returns are filed.3. The JCDR contended that the appellant did not indicate availing credit on Cement and TMT bars in the ST-3 Returns. They argued that these items cannot be considered inputs as the resulting Capital Goods are not excisable goods.4. The judgment analyzed the definitions of Capital Goods and input under the Cenvat Credit Rules, emphasizing that goods used for providing output services are eligible for credit. It was noted that inputs used for manufacturing Capital Goods, further used in the factory, are considered inputs. Despite the appellant not being a manufacturer but a service provider, the usage of inputs for constructing storage tanks and pipelines justifies credit availment.5. Considering the undisputed usage of Cement, TMT Bars, and steel tubes for construction purposes related to storage and warehouse services, the judgment concluded that denial of credit would be unjustified. The appellant's utilization of these inputs for manufacturing capital goods aligned with the Cenvat Credit Rules, warranting credit availment.6. Consequently, the Order-in-Appeal was set aside, and the appeal was allowed with any consequential relief. The judgment highlighted the permissible Cenvat credit for service providers under specific circumstances, emphasizing adherence to the defined rules and justifying credit availment based on the purpose of input usage in service provision.