Case Law Details
Commissioner of Central Excise, Customs and Service Tax Vs Viraj Steel and Energy Limited (CESTAT Kolkata)
The Commissioner of Central Excise challenged Viraj Steel and Energy Limited’s CENVAT credit claims on various steel items. This led to an appeal, resulting in a crucial ruling by CESTAT Kolkata.
The crux of the matter lay in whether the steel items procured by Viraj Steel qualified as ‘input’ or ‘capital goods’ under the CENVAT Credit Rules, 2004. The Revenue contended that these items were not integral to the sponge iron manufacturing process. However, Viraj Steel argued that these items were essential for fabricating plant and machinery, thus aiding in their final product manufacturing.
During the hearing, Viraj Steel presented a certificate from a Chartered Engineer, validating the usage of these items for fabrication purposes. CESTAT Kolkata, considering the evidence and legal precedents, including the case of M/s. Vandana Global Ltd. v. Commissioner of C.Ex. & Cus., Raipur, ruled in favor of Viraj Steel. The tribunal allowed CENVAT Credit, acknowledging the usage of steel items in fabricating structures essential for installing capital goods, which contributed to the final product’s manufacture.
However, a minor demand, not contested by Viraj Steel, was confirmed, requiring payment along with interest. Nevertheless, no penalty was imposed on Viraj Steel, considering the circumstances of the case.
In a significant verdict, CESTAT Kolkata dismissed the Revenue’s appeal and disposed of Viraj Steel’s cross-objection, upholding the CENVAT Credit claim. This ruling not only clarifies the eligibility criteria for CENVAT Credit but also underscores the importance of substantiating claims with tangible evidence, such as certificates from authorized professionals.
FULL TEXT OF THE CESTAT KOLKATA ORDER
Both the sides are in appeal against the impugned order.
2. The facts of the case are that the assessee is engaged in the manufacture of sponge iron and availing CENVAT Credit on various steel items during the impugned period, namely, Alloy plate, Alloy steel bend, Aluminium Rolled Product, Boiler structure, Boiler component, Cable, Conductor, Control Panel, Conveyor structure, Dileting, Fabricated Steel Structures, Level Switch without controller, MS flange, parts and accessories of motor vehicles, PSC Pole, Seamless Bend, structures, Turbinol-46 and Tower materials, etc., falling under Chapters 26, 27, 68, 71, 73, 76, 85,86, & 87 of the Central Excise Tariff Act (CETA) treating them as ‘capital goods’ and iron and steel items, namely, M.S. Angle, M.S. Channels, Beams, Joist, M.S. Plates, M.S. Rounds and coils, etc., falling under Chapter 72 of the CETA treating them as ‘input’.
3. The Revenue is of the view that these items are neither inputs nor capital goods for manufacture of sponge iron. In that view, it is their allegation that these items do not quality as ‘input’ within the meaning of Rule 2(k) or ‘capital goods’ within the meaning of Rule 2(a) of the CENVAT Credit Rules, 2004.
4. Periodical Show Cause Notices were issued to the assessee to deny CENVAT Credit availed by them on the above said items.
5. The matter was adjudicated and finally, a part of the CENVAT Credit was allowed to the assessee holding that these items have been used by the assessee for the fabrication of their plant to manufacture their final product. A part of the CENVAT Credit was denied to them holding that the assessee was not able to show the application of the said items in their use for manufacture of their final product.
5.1. Therefore, both sides are in appeal before us. The assessee has also filed a cross-objection to the appeal filed by the Revenue.
6. Today, when the matter was called for hearing, the Ld. Authorized Representative appearing for the Revenue submits that in the Revenue’s appeal, the amount is less than Rs.50,00,000/- (Rupees Fifty Lakhs only). Thus, we find that the amount involved in the said amount is less than the monetary limit prescribed for litigation before the CESTAT in terms of C.B.E.C. Instruction in F. No. 390/Misc./116/2017-JC dated 22nd August, 2019 regarding the National Litigation Policy.
7. On merits, it is submitted by the Ld. Counsel appearing for the assessee that all the items involved are used in fabrication of their plant and machinery, to manufacture their final product. To that effect, they have produced a certificate issued by the Chartered Engineer with regard to usage of the said items for fabrication of their plant and machinery.
7.1. With regard to a short demand of Rs.96,645/-on which CENVAT Credit has been denied by the Ld. Commissioner (Appeals), the assessee is not pressing for the said amount.
8. The Ld. Authorized Representative appearing for the Revenue reiterated the findings in the impugned order.
9. Heard the parties and considered their submissions.
10. As the assessee is able to prove that all the items in question have been used in fabrication of structures for installation of capital goods which were ultimately used in the manufacture of their final product, in the circumstances, as per the decision of the Hon’ble Chhattisgarh High Court in the case of M/s. Vandana Global Ltd. v. Commissioner of C.Ex. & Cus., Raipur [2018 (16) G.S.T.L. 462 (Chhattisgarh)] we allow CENVAT Credit to the assessee.
10.1. Further, the amount of Rs.96,645/- is not pressed by the assessee and therefore, demand of the said amount is confirmed, which is payable along with interest.
11. In the facts and circumstances of the case, we hold that no penalty is imposable on the assessee.
12. In view of above discussion, the appeal filed by the Revenue is dismissed. The cross-objection filed by the assessee against the said appeal filed by the Revenue is disposed of accordingly. The appeal filed by the assessee also stands disposed of in the above terms.
(Dictated and pronounced in the open court)
Author Bio
