M/S Shree Narmada Khand vs Commissioner, Central Excise & Service ...
- Case No.Appeal No.E/442/2012
Ratio decidendi
The rule this decision rests on
Where a manufacturer furnishes a certificate from a competent Chartered Engineer that the impugned inputs were used in manufacturing capital goods rather than in creating support structures, the adjudicating authority cannot reject that certificate absent contrary expert opinion, and CENVAT credit on such inputs is admissible under the CENVAT Credit Rules, 2004, not being barred by the Larger Bench decision in Vandana Global Ltd. Where the admissibility of CENVAT credit on the disputed inputs was unsettled during the relevant period, with favourable tribunal decisions available to the assessee, the assessee's bona fide belief in its entitlement to credit precludes invocation of the extended period of limitation, and consequently no penalty may be imposed under Section 11AC of the Central Excise Act, 1944, where the show cause notice is issued beyond the normal period.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Appeal No.E/442/2012 [Arising out of OIA No.C/24/Surat-II/2012, dt.15.03.2012, passed by Commissioner (Appeals), Central Excise & Customs, Surat]
M/s Shree Narmada Khand Udyog Sahakari Mandli Ltd Appellant
Vs
Commissioner, Central Excise & Service Tax, Surat-II Respondent
Represented by:
For Appellant: Shri Vinay Kansara, Advocate For Respondent: Shri S.K. Shukla, Authorised Representative
For approval and signature:
Honble Mr. H.K. Thakur, Member (Technical)
1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
HONBLE MR. H.K. THAKUR, MEMBER (TECHNICAL)
Date of Hearing/Decision:08.06.2015
Order No. A/10765 / 2015, Dt.08.06.2015
Per: H.K. Thakur
This appeal has been filed by the Appellant against OIA No.C/24/Surat-II/2012, dt.15.03.2012. The issue involved in this appeal is admissibility of CENVAT Credit on certain items like C.S. Bars, M.S. Channels/Angles/Plates, HR Coils/Steel Plates etc under CENVAT Credit Rules, 2004 used in the factory premises of the Appellant.
2. Shri Vinay Kansara, learned Advocate appearing on behalf of the Appellant argued that these items are used in the manufacture/fabrication of Process Vessels, Storage Tanks, Oliver, Crystalizer, Vacuum Pan, Vapour Line Juicer Heater, Sulphur Furnace etc which are capital goods and are covered within the definition of input given under Rule 2(k) of CENVAT Credit Rules, 2004. Learned Advocate relied upon the case law of Hindustan Zinc Ltd Vs CCE [2005 (188) ELT 313 (T)] and CCE Vs Madras Cements Ltd [2006 (203) ELT 605 (T)] to strongly argue that the inputs are used in the manufacture of capital goods which are further used for the manufacture of final product and are eligible to CENVAT Credit under Rule 2(k) of CENVAT Credit Rules, 2004. It was his case that a certificate from the Chartered Engineer was also furnished by the Appellant before the lower authorities to the extent that the materials i.e. C.S. Bars, M.S. Channels/Angles/Plates, HR Coils/Steel Plates etc are used in the manufacture of capital goods. It was the case of the learned Advocate that the inputs mentioned above are not used for making support structure for the machines. The learned Advocate also argued that the show cause notice pertains to the period April 2005 to October 2009, is time barred as credit taking entries are upto 07.03.2009, whereas the show cause notice was issued on 29.03.2010
3. Shri S.K. Shukla, Authorised Representative appearing on behalf of the Revenue made the Bench go through the Paras 21, 21.1 & 21.2 of the Order-in-Original passed by the Adjudicating authority and argued that the items for which the credit has been availed, were actually used in making the support structure at the time of installation of machineries and that the contention of the Appellant regarding use of input in the manufacture of capital goods is only an after-thought. On the issue of applicability of the extended period, the learned Authorised Representative for the Revenue made the Bench go through Para 5.8 of the OIA dt.15.03.2012 passed by the First Appellate Authority, to drive home the point that the irregular CENVAT Credit taken by the Appellant was detected during the Audit by the officers of Central Excise and that the extended period of five years is applicable.
4. Heard both the sides and perused the case records. The issue involved in the present proceedings is with respect to the admissibility of CENVAT Credit on items like C.S. Bars, M.S. Channels/Angles/Plates, HR Coils/Steel Plates etc. It is the case of the Appellant that these materials are used in the manufacture of capital goods, like Process Vessels, Storage Tanks, Oliver, Crystalizer, Vacuum Pan, Vapour Line Juicer Heater, Sulphur Furnace etc and are not used in making the support structure. The Appellant has produced a Chartered Engineers certificate before the lower authorities to that effect. Once a certificate from an appropriate and competent authority has been furnished by the Appellant, then it is not open to the Adjudicating authority to question that certificate unless another opinion from an expert is obtained which is contrary to the certificate given by the Appellant. The stand of the Appellant before the Adjudicating authority right from the beginning is that the inputs are used in the manufacture of the capital goods. There is no evidence on record that the use of such inputs was made by the Appellant in creation of support structures for the machinery. The claim of the Appellant is supported by the Chartered Engineers certificate and therefore, the CENVAT Credit of input used in the manufacture of capital goods, cannot be denied as the same is not barred by the Larger Bench judgment in the case of Vandana Global Ltd Vs CCE Raipur [2010 (253) ELT 440 (LB)].
5. On the time bar aspect, it is observed that the issue of admissibility of CENVAT Credit on items like C.S. Bars, M.S. Channels/Angles/Plates, HR Coils/Steel Plates etc, when used in making support structures or in the manufacture of capital goods; was disputable which was only settled by CESTAT Larger Bench judgment in the case of Vandana Global Ltd (supra). The Appellant had favourable judgments at the relevant period in the light of Hindustan Zinc Ltd Vs CCE (supra), CCE Vs Madras Cements Ltd (supra). In view of the confusion on the issue, Appellant had a bonafide belief that credit on the inputs was admissible and the extended period cannot be invoked as the same issue was settled by the Larger Bench judgment in the case of Vandana Global Ltd Vs CCE Raipur (supra). Under the circumstances, the extended period cannot be invoked against the Appellant and no penalty can be imposed under Section 11AC of Central Excise Act, 1944. The period of dispute is from April 2005 to 07.03.2009 and the show cause notice has been received by the Appellant after 29.03.2010 and is thus clearly time barred.
6. Based on the above observations, the appeal filed by the Appellant is allowed on merits as well as on time bar.
(Dictated and pronounced in Court)
(H.K. Thakur) Member (Technical)
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