CENVAT credit on capital goods used in the construction/erection of plant is allowed

Brief of the Case

In the case of M/s.Thiru Arooran Sugars Vs. The Custom, Excise and Service Tax Appellate Tribunal, Hon’ble Madras High Court held that CENVAT credit on capital goods used in the erection of various capital goods, viz., M.S.Plates, M.S.Angles, M.S.Channels and H.R. Plates, which were purchased and utilized in the construction/erection of plant is allowed by following the principles laid down in the case of 2010 (255) E.L.T.481 (Commissioner of Central Excise Jaipur V. Rajasthan Spinning & Weaving Mills Ltd.).

Brief Facts of the case

The appellant is a manufacturer of sugar, molasses, rectified spirit etc. The appellant availed Cenvat Credit on capital goods used in the erection of various capital goods, viz., M.S.Plates, M.S.Angles, M.S.Channels and H.R. Plates, which were purchased and utilized in the construction/erection of plant.

Show cause notices were issued by the Department stating that these are not capital goods and a demand was made on these goods. Reply was sent by the appellant objecting to the demand.   Rejecting the contention of the appellant, the Adjudicating Authority confirmed the demand. Aggrieved by which, the appellant preferred an appeal before the Commissioner (Appeals), who allowed the appeal relying upon the decision of the Tribunal in the case of Sakthi Sugars Ltd. Vs. CCE reported in [2008 (227) ELT 107]. As against the same, the Department pursued the matter before the Appellate Tribunal.

The Tribunal following the decision in the case of Vandana Global Ltd. & Others reported in 2010 (253) ELT 440 allowed the appeal filed by the Revenue.

Aggrieved by the order of the Tribunal, the appellant has preferred the present appeal.

Contentions of the Appellant

The appellant contended that the issue involved in these appeals is covered by a decision of this Court dated 10.7.2014 in C.M.A.No.1265 of 2014, wherein, this Court following the ratio laid down in the decision reported in 2010 (255) E.L.T.481 (Commissioner of Central Excise Jaipur V. Rajasthan Spinning & Weaving Mills Ltd.) and the earlier decision of this Court in C.M.A.No.3101 of 2005 dated 13.12.2012, dismissed the appeal filed by the Revenue.

Contentions of the Revenue

The Revenue relied upon the decision reported in 2011-TIOL-73-SC-CX (Saraswati Sugar Mills V. Commissioner of Central Excise, Delhi – III) in Civil Appeal No.5295 of 2003 dated 02.08.2011 wherein this Court has earlier considered the issue in C.M.A.No.1301 of 2005 dated 31.12.2012 and dismissed the appeal filed by the Revenue.

Held by Hon’ble Madras High Court

The Hon’ble High court stated that from a perusal of the above said judgment, it is seen that there is no change in the circumstance and this Court had already considered the issue and held that the decision reported in 2011-TIOL-73-SC-CX (Saraswati Sugar Mills V. Commissioner of Central Excise, Delhi – III) in Civil Appeal No.5295 of 2003 dated 02.08.2011 is distinguishable on facts. This Court applied the principles laid down in the decision reported in 2010 (255) E.L.T.481 (Commissioner of Central Excise Jaipur V. Rajasthan Spinning & Weaving Mills Ltd.) and held in favour of the assessee.

Hence, following the principles laid down in the decision reported in 2010 (255) E.L.T.481 (Commissioner of Central Excise Jaipur V. Rajasthan Spinning & Weaving Mills Ltd.) and the earlier decision of this Court in C.M.A.No.3101 of 2005 dated 13.12.2012, the Hon’ble high Court allowed the appeal.