Ellenbarrie Industrial Gases Ltd Vs Commissioner of Central Excise (CESTAT Hyderabad)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad, allowed the appeal and set aside the impugned order denying CENVAT credit on cryogenic storage tanks and related inputs, except for limited items, while also holding that extended limitation and penalties were not applicable.
The appellant, engaged in manufacture of industrial gases and provision of taxable services such as erection, commissioning, and supply of tangible goods, had availed CENVAT credit on (i) cryogenic storage tanks and (ii) inputs like SS coils, sheets, plates, cement, and bars used for fabrication, installation, and erection of such tanks. The adjudicating authority denied credit on the ground that storage tanks were not used within the factory and that fabricated tanks became immovable property, thereby not qualifying as goods. Credit on electrodes was also denied, and extended limitation was invoked.
The Tribunal examined whether cryogenic storage tanks qualified as capital goods. It held that there was no dispute that such tanks are capital goods, and under the CENVAT Credit Rules, capital goods used for providing output services such as supply of tangible goods or erection and commissioning services are eligible for credit. The Tribunal found that the adjudicating authority erred in restricting eligibility to use within the factory, without considering that the tanks were used for providing taxable services. It also noted that the appellant held service tax registration and had provided such services, and that even the Department had issued a show cause notice for service tax on supply of tangible goods. Accordingly, credit on cryogenic storage tanks was held admissible.
