Case Law Details
East India Holding Pvt. Ltd. Vs Commissioner of CGST & Central Excise (CESTAT Kolkata)
Introduction: In a recent ruling by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Kolkata, the issue of reversing CENVAT credit on capital goods due to wear and tear was addressed. The case of M/s East India Holding Pvt. Ltd. vs. Commissioner of CGST & Central Excise revolved around the alleged irregular availment of CENVAT credit by the appellant concerning old and used Cast Iron (C.I.) Moulds, which were considered capital goods. The allegation was that these Moulds were clandestinely removed without the payment or reversal of CENVAT credit. The impugned order confirmed a demand for irregular CENVAT credit, and a penalty was imposed under Rule 15 of the CENVAT Credit Rules, 2004. This article provides a detailed analysis of the case and its implications.
Background of the Case: M/s East India Holding Pvt. Ltd. is engaged in the manufacture of excisable goods, including M.S. Ingots and Billets. The show cause notice issued to the appellant alleged irregular availment of CENVAT credit due to the clandestine removal of 556.780 metric tons of old and used C.I. Moulds, which were classified as capital goods, without the payment or reversal of CENVAT credit. This allegedly occurred under the guise of captive use during the period from 2006-07 to 2008-09.
Appellant’s Position: The appellant argued that all the Moulds purchased during the relevant period were indeed put into use during that period. After utilizing the C.I. Moulds, they became damaged and were consumed within the factory. The C.I. Moulds Register maintained by the appellant documented the receipt and consumption of these Moulds. The Range Superintendent periodically verified this register, and no objections were raised.
Revenue’s Stand: The Revenue’s stance was that the Moulds mentioned in the Mould Register were not physically available for verification during the course of the audit. They alleged that these Moulds were clandestinely removed and insisted on the reversal of CENVAT credit availed on these capital goods.
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