Winsome Yarns Ltd. Vs Commissioner of Central Excise (Punjab and Haryana High Court)
Material Facts
The appellant, a manufacturer of cotton yarn registered under the Central Excise Act, availed CENVAT credit under the CENVAT Credit Rules, 2004 on GP coils, GP sheets, aluminium sections and similar items used for manufacturing air ducts attached to an air humidification machine in its factory. Following an audit conducted on 26.08.2009, a show cause notice dated 03.08.2010 alleged wrongful availment of CENVAT credit. The adjudicating authority confirmed a demand of ₹15,16,552 along with equivalent penalty and interest. On appeal, the First Appellate Authority partly allowed the appeal, disallowing demand of ₹7,67,824 while upholding the remaining demand, interest and penalty. Before the Tribunal, the appellant restricted its challenge to CENVAT credit of ₹5,93,453 relating to GP coils, GP sheets, aluminium sections and similar items. The Tribunal dismissed the appeal.
Procedural History
The appellant challenged the Tribunal’s order before the Punjab and Haryana High Court under Section 35G of the Central Excise Act, 1944. The High Court also condoned a delay of four days in filing the appeal.
Legal Issues
The principal issue before the Court was:
- Whether the Tribunal was justified in rejecting the appellant’s claim for CENVAT credit on GP coils, GP sheets, aluminium sections and similar items used in manufacturing air ducts for the humidification machine by holding that they were not “capital goods” under the CENVAT Credit Rules, 2004.
Relevant Statutory Provisions
