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2017 (6) TMI 1204 - CESTAT ALLAHABADCENVAT credit - whether they are entitled to take Cenvat credit on iron and steel items namely Shapes and Sections, Angles, M.S. Plates, M.S. Round, M.S. Plates, Channels, Hot Strips, Chequered Plates, M.S. Plat, HR coils, Aluminium Sheets, R.S. Joist, etc., falling under Chapter 72, 73 and 76 of the Central Excise Tariff Act, 1985 including welding electrodes? - whether the exclusions provided in Explanation-2 of Rule 2 (k) of Cenvat Credit Rules, 2004, inserted with effect from 07/07/2009 have prospective effect only? - whether the demand is barred by limitation? Held that: - The Apex Court in the case of J.K. Cotton Spg. & Weaving Mills Co. Ltd. Vs. Sales Tax Officer, Kanpur [1964 (10) TMI 2 - SUPREME COURT OF INDIA], while interpreting the scope of the expression "used in the manufacture of" in Section 8 (3) (b) of Central Sales Tax Act, 1956, has held that if a process or activity is so integrally related to the ultimate manufacture of goods, so that, without that process or activity, the manufacture may, even if theoretically possible, be commercially inexpedient, the goods intended in that process or activity, would have to be treated as used in the manufacture. When the Apex Court has interpreted the expression 'used in the manufacture' in the above manner, the scope of the expression 'used in or in relation to manufacture,' 'whether directly or indirectly' in the definition of input in Rule 2 (k) of the Cenvat Credit Rules, 2004 would be much wider. So far the utilization of items like M.S. Plates, are concerned, it is admitted fact that such items have either been used in repair and maintenance or for fabrication of various capital items or machinery of the sugar mill and, therefore, the same would be eligible for Cenvat credit - That the steel items used for fabrication of various items of Sugar Mill Machinery like cane, Bagasse carrier, Bagasse Cilo, pipe, etc., being sugar mill machinery and hence are covered by chapter 84, would be eligible for Cenvat credit as inputs and the definition of input also cover the goods used for manufacturing of capital goods used in the factory of manufacturer of dutiable goods. As the steel items have admittedly been used for fabrication of various items of plant and machinery, being components of sugar mill machinery, or used in the repair of such machinery, the steel items would have to be treated as input in the manufacture of capital goods and hence would be covered by the definition of input in Rule 2(k) and would be eligible for credit. Whether the exclusions provided in Explanation-2 of Rule 2 (k) of Cenvat Credit Rules, 2004, inserted with effect from 07/07/2009 have prospective effect only? - Held that: - Hon’ble Gujarat High Court in the case of Mundra Port and Special Economic Zone Ltd. Vs CCE [2015 (5) TMI 663 - GUJARAT HIGH COURT] have held, overruling the Larger Bench of this Tribunal in the case of M/s Vandana Global Limited [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] that explanation 2 in Rule 2(k) of CCR, 2004, inserted with effect from 7th July, 2009 have only prospective effect, observing that there is nothing in the amending Act to suggest that amendment was clarificatory in nature. Time limitation - Held that: - when objection was raised by audit that they have rightly taken Cenvat credit of the items in dispute and from such date, show cause notices have been issued after more than 12 months - SCN are bad on the ground of limitation and there is no ground for invoking the extended period of limitation. Appeal allowed - decided in favor of appellant.
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