2020 (9) TMI 1158 - HC - Central Excise

CENVAT Credit - capital goods which were not specified in the Rule 2(a)(A) of CENVAT Credit Rules 2004 - Construction materials - Whether the Tribunal committed an error of law in not appreciating the Legislative Intent in insertion of but shall not include cement angles channels Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bar (TMT) and other used for construction of factory shed buildings or laying foundation or making structures for support of capital goods vide Not.No.16/2009-C.E (N.T) dated 7/7/2009 being clarificatory in view of already existing explanation 2 to Sec.2 (k) of CENVAT Credit Rules 2004 and therefore operates retrospectively? HELD THAT - The matter is no longer res integra and the learned Tribunal has rightly followed the decisions and held in favour of the Assessee - ollowing the three Hon ble High Court decisions in the appellant s own case cited supra and also maintaining this Tribunal s order in the case of Dalmia Cements (Bharath) Ltd. Vs CCE Trichy 2015 (8) TMI 1179 - CESTAT CHENNAI holding that immovability is not a criteria for denial of Cenvat Credit we hold that appellants are eligible for Cenvat Credit on the capital goods used in Dry Process Cement Manufacturing Plant . Accordingly the impugned order is set aside and the appeal is allowed. There are no merit in the present Appeal and the same is liable to be dismissed.

Summary

Issues:
1. Admissibility of CENVAT credit on capital goods not specified in CENVAT Credit Rules, 2004.
2. Eligibility of CENVAT credit on construction materials used for civil construction activity.
3. Interpretation of legislative intent in the insertion of specific items in CENVAT Credit Rules, 2004.

Analysis:

1. The appeal involved the question of whether CENVAT credit is permissible on capital goods not explicitly listed in Rule 2(a)(A) of the CENVAT Credit Rules, 2004. The Tribunal had allowed the credit, citing precedents and the judgment in Vikram Cements v. Commissioner of Central Excise. The High Court upheld the Tribunal's decision, emphasizing that the matter was settled law post the substitution of Modvat Rules by CENVAT Rules.

2. Another issue was the eligibility of CENVAT credit on construction materials like cement, MS angles, plates, channels, and HR sheets used for civil construction activity. The Tribunal had allowed the credit based on previous rulings in favor of the Assessee. The High Court, in multiple cases, affirmed the Tribunal's decision, emphasizing the importance of these materials in supporting machinery for plant operations.

3. The interpretation of legislative intent regarding the insertion of specific items in the CENVAT Credit Rules, 2004 was also a crucial aspect. The High Court, relying on its previous judgments, dismissed the Revenue's appeals and upheld the Assessee's right to claim CENVAT credit on capital goods used in the manufacturing plant. The Court highlighted the importance of these goods in facilitating the functioning of machinery and plant operations.

In conclusion, the High Court dismissed the appeal, affirming the Tribunal's decision to allow CENVAT credit on capital goods and construction materials for the Assessee. The judgments relied on precedents, legislative intent, and the functional necessity of these materials in supporting plant operations. The substantial questions of law were answered in favor of the Assessee, emphasizing the settled nature of the issue based on previous rulings and legal principles.