2023 (4) TMI 165 - AT - Central Excise

CENVAT Credit - capital goods or not - foundation bolts would fall under Chapter 73 or not - time limitation - suppression of facts or not - Rule 2 (a) of the Cenvat Credit Rules 2004 - HELD THAT - Admittedly the foundation bolts have been received and used by the Appellant in their factory where they are manufacturing dutiable goods. As the vendor has classified the goods under CET 8455 the Appellant has taken the Credit on the foundation bolts as Capital goods taking the Cenvat Credit in two different years. Even otherwise as per the definition of inputs in terms of Rule 2 (k) of CCR 2004 as it stood at the material time any item which is used in or in relation to the manufacturing activity directly or indirectly will qualify for Cenvat Credit. In the case law of A.C.C. Ltd. cited supra the Tribunal has held that the assessee will be eligible for the Cenvat Credit for the foundation bolts purchased by them. For coming to this conclusion they have relied on the case law of RELIANCE INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX. SURAT 2005 (10) TMI 203 - CESTAT MUMBAI . Time Limitation - HELD THAT - It is an admitted fact that the Cenvat Credit taken on the foundation bolts has been reflected by them in their ER-1 Returns in 2007 and 2008. They have also enclosed copies of RG-23C records wherein the Credit taken for the foundation bolt has been shown clearly. Therefore the Department cannot claim that assessee has indulged in any suppression. The Show Cause Notice has been issued on 27/04/2011 for the Credit taken in 2007 and 2008. Since all the details of Cenvat Credit have been properly recorded by the Appellant in the ER-1 the question of suppression will not be sustainable - the present confirmed demand for the extended period is legally not sustainable even on account of limitation. Appeal allowed.

Summary

Issues:
1. Correct classification of foundation bolts for Cenvat Credit eligibility.
2. Contesting Show Cause Notice on merits and limitation.
3. Interpretation of Rule 2 (k) of CCR, 2004 for Cenvat Credit eligibility.
4. Applicability of relevant case laws on Cenvat Credit for foundation bolts.
5. Department's denial of Cenvat Credit based on classification under Chapter 73.

Analysis:
1. The Appellant, a manufacturer of Sponge Iron and TMT Bars, claimed Cenvat Credit for foundation bolts received under the Capital Goods heading. The Show Cause Notice questioned the eligibility of the credit due to the classification of foundation bolts under Chapter 73. The Appellant argued that the vendor classified the bolts under CET 8555.9000, justifying their Cenvat Credit claim. Both Lower Authorities confirmed the demand, leading the Appellant to appeal to the Tribunal.

2. The Appellant's Advocate contended that the credit was rightfully claimed under Capital goods as per the vendor's classification. They emphasized that the ER-1 Returns reflected the credit, negating any suppression of facts. The Advocate also cited a relevant case law supporting the eligibility of Cenvat Credit for foundation bolts used in manufacturing activities.

3. The Tribunal observed that the foundation bolts were indeed utilized in the manufacturing process of dutiable goods by the Appellant. They noted that as per Rule 2 (k) of CCR, 2004, any item directly or indirectly used in manufacturing qualifies for Cenvat Credit. Referring to precedent cases, the Tribunal upheld the Appellant's eligibility for the credit, emphasizing the importance of the items' usage in manufacturing activities.

4. On the limitation issue, the Appellant's compliance with ER-1 Returns and RG-23C records was highlighted. The Tribunal ruled that since the details of Cenvat Credit were properly recorded and disclosed, the Department's claim of suppression was unsustainable. The Show Cause Notice issued beyond the prescribed period was deemed legally unsustainable, leading to the allowance of the appeal with consequential relief.

5. The Department's argument based on the classification of foundation bolts under Chapter 73 was countered by the Tribunal's interpretation of the relevant rules and case laws supporting the Appellant's claim for Cenvat Credit. The decision set aside the Lower Authorities' findings, emphasizing the correctness of the Appellant's actions in claiming the credit for foundation bolts used in their manufacturing process.