2026 (2) TMI 332 - AT - Central Excise

Cenvat credit eligibility for inputs and input services remanded for recomputation and redetermination, including civil immovable works

Cenvat credit on inputs used in fabrication of capital goods was evaluated by the adjudicating authority distinguishing items consumed in fabrication from ... Cenvat credit on inputs used in fabrication of capital goods - inputs used as supporting structures vs inputs for capital goods - eligibility of input service credit - effect of amendments in Cenvat Credit Rules post 07.07.2009 - remand for recomputation and verification based on documentary evidence - HELD THAT:- We have perused the impugned order, whereby, Adjudicating Authority has gone through the eligibility or otherwise in respect of various inputs and input services. We find that she has decided the whole issue based on various judgements as well as factual matrix, as also the CA’s certificate certifying the uses of those items in connection with either for fabrication of capital goods or for support structure. Therefore, based on the factual matrix as also various case laws relied by her, she has dis-allowed the credit on MS items, allowed input credit in respect of certain services while dis-allowed in respect of other services. We have also perused the order dated 30.01.2014, wherein, the issue was eligibility of certain MS items like MS pipes, plates etc., used for fabrication of chutes, bins, ducts, cyclones, vents, hoppers, stacks. It also involved eligibility of credit in respect of various input services and she has examined all the input services and allowed the same, except in respect of insurance, banking and financial services and rent-a-cab and pest control. She has also held that credit availed on such quantity of MS plates and MS steels used in fabrication of the equipment/machinery are regular, whereas, denied the credit in respect of steel items used for manufacturing supporting structure by holding that the same cannot be treated as inputs for capital goods or as inputs in relation to the final products. Therefore, we find that the issues involved in the present appeal have now attained finality in terms of the said order passed by the Adjudicating Authority and as further upheld with certain modification and observation by the Tribunal vide it’s order dated 22.01.2016. Therefore, in appeal, the matter is remanded back for re-computation of demand, with directions, supra, and impugned order is set aside. Appeal is allowed by way of remand. Admissibility of Cenvat Credit of Service Tax taken by the appellant under the category of input services used for making civil structures like boundary wall, civil and structural work, helipad etc., which are immovable property as also certain corrections in duty paying documents. These issues are also remanded back to the Adjudicating Authority for re-determination, in view of the discussions and decisions referred supra. Accordingly, Department appeal is also allowed by way of remand. Issues: (i) Whether Cenvat credit is admissible on MS items (HR coils, MS beams, MS plates, pipes) used for fabrication of equipment (hoppers, cyclones, ducts, chutes, bins, vents, stacks) or whether such items amount to supporting structures/excluded items under the Cenvat Credit Rules, 2004; (ii) Whether credit in respect of various input services claimed by the appellant is admissible for the period in question and whether the matter requires re-determination in view of prior adjudications.Issue (i): Eligibility of Cenvat credit on MS items used in fabrication of capital equipment versus exclusion where used as supporting structures or foundations.Analysis: The Adjudicating Authority examined nature and use of the MS items and applied factual scrutiny supported by CA/engineer certification and prior decisions. The Tribunal noted previous adjudications in the appellant's own case and subsequent Tribunal observations, as well as amendments to the Cenvat Credit Rules (post 07.07.2009) that affect excluded categories. Given overlapping factual matrices with earlier orders, the Tribunal directed re-computation by the Adjudicating Authority based on documentary evidence and technical certificates to determine whether each steel item was part of fabricated capital goods or constituted supporting/foundation structure excluded by the Rules.Conclusion: The matter on eligibility of credit for MS items is remanded to the Adjudicating Authority for re-computation and fresh determination of admissibility based on documentary and technical evidence; the impugned confirmation of demand is set aside for reconsideration.Issue (ii): Admissibility of input service credit claimed by the appellant for the relevant period.Analysis: The Tribunal noted the Adjudicating Authority's prior denovo findings (order dated 30.01.2014) and the Tribunal's subsequent order (22.01.2016) holding that many services received prior to 01.04.2011 fell within the then broader definition of input services and were allowable. Where the factual matrix is similar, the Tribunal directed that the Adjudicating Authority follow those earlier decisions; where deviation exists, the Authority must re-determine admissibility applying settled principles and documentary proof.Conclusion: The admissibility of input service credit is remitted to the Adjudicating Authority for re-determination in accordance with the earlier denovo findings and Tribunal directions; departmental challenges to certain service credits are to be re-decided.Final Conclusion: Both the appellant's appeal against confirmed demands and the Department's appeal against dropped demands are allowed by way of remand; the case is sent back for re-computation and fresh factual determination of ineligible credit consistent with the Adjudicating Authority's prior denovo order and the Tribunal's earlier ruling.Ratio Decidendi: Where prior reasoned adjudication on substantially similar factual matrix and statutory regime exists, the Adjudicating Authority must re-determine eligibility of Cenvat credit using documentary and technical evidence and apply the legal distinctions between items forming part of fabricated capital goods and supporting/foundation structures excluded by the Cenvat Credit Rules, 2004.