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2023 (12) TMI 112 - CESTAT ALLAHABADDenial of CENVAT Credit - effect of amendment in Explanation 2 vide Notification No.16/2009-C.E. (N.T.), dated 07.07.2009 - retrospective or prospective effect - penalty - HELD THAT:- The show cause notice has been issued mainly based on the decision of VANDANA GLOBAL LTD. VERSUS CCE [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] and the same has been categorically overruled by Hon'ble Chhattisgarh High Court in M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT]. The Hon'ble High Court has given a specific finding against the finding of retrospective operation of the amendment to the explanation to Rule 2(k) of Cenvat Credit Rules holding that the said amendment will not be retrospectively applicable. Further, the said finding of the learned Adjudicating Authority is in violation of a catena of decisions of several High Courts and Supreme Court allowing the admissibility of credit on inputs used in the fabrication of support structures of capital goods. Similar issue came up for consideration before Hon’ble Gujarat High Court in the case of MUNDRA PORTS AND SPECIAL ECONOMIC ZONE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & CUSTOMS [2015 (5) TMI 663 - GUJARAT HIGH COURT] and before Hon’ble Madras High Court in the case of M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX & THE COMMISSIONER OF CENTRAL EXCISE [2015 (3) TMI 661 - MADRAS HIGH COURT] wherein it was held that the exclusion incorporated in Explanation 2 to Rule 2(k) of the Credit Rules w.e.f. 07.07.2009 cannot be given retrospective effect thereby effectively holding that the finding in Vandana Global is erroneous. Hon'ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING & WEAVING MILLS LTD. [2010 (7) TMI 12 - SUPREME COURT], by applying the user test, held that credit availed on steel items for fabrication of Chimney was admissible. The availment of credit on PSC poles is covered by the decision of Hon’ble Rajasthan High Court in the case of ADITYA CEMENT VERSUS UNION OF INDIA [2007 (3) TMI 190 - HIGH COURT RAJASTHAN]. It has been held that the railway track material used for transporting of coal and products of cements are eligible for credit as without supply of fuel the plant does not function. Thus, the railway track cannot be kept out of the consideration for availing credit, though, such material was not being used directly in the manufacture of cement. In such situation, imposition of penalty is also not sustainable on the main as well as the other Appellants. The impugned order cannot be sustained and is accordingly set aside - appeal allowed.
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