Larsen & Toubro Limited. Vs Commissioner of Central Excise (CESTAT Kolkata)
Material Facts: The appeals arose from an order denying CENVAT credit on capital goods and imposing penalties on the appellants. M/s. Tata Steel Limited (“Tata”) was engaged in the production of sized iron ore concentrate and iron ore fines. To meet increased iron ore requirements for its Jamshedpur plant, Tata commissioned a new material handling system with wagon loading facilities at its Noamundi Iron Ore Mines. For this project, Tata entered into multiple contracts covering the supply of indigenous designs and drawings, design, manufacture and supply of plant, machinery and equipment, receipt and handling of materials at site, erection, testing, commissioning, and civil and structural steel works.
Pursuant to these arrangements, Tata placed purchase orders on M/s. Larsen & Toubro Limited (“L&T”) for the supply of equipment, plant and machinery qualifying as capital goods. The goods were either manufactured and supplied by L&T or procured from other manufacturers and delivered directly to Tata’s premises. Tata availed CENVAT credit on these capital goods.
During the erection and commissioning stage, Tata supplied the capital goods to L&T for installation. L&T discharged service tax under the Composition Scheme by clubbing consideration received under all contracts and did not avail CENVAT credit on goods supplied under the contracts. Tata availed CENVAT credit on the service tax paid by L&T and on the capital goods supplied under the sale contracts, but did not avail credit on goods used by L&T in executing the contracts.
