The Mumbai bench of the CESTAT, while granting relief to M/s Gelnova Laboratories (I) Pvt. Ltd, held that the cenvat credit is available even if the supplier has classified the goods 94032010 and goods falling under the said Chapter is not covered within the definition of “capital goods” as provided in Rule 2(a) of the CENVAT Credit Rules, 2004.
The appellant had received certain invoices from the supplier which were of the nature of components of machinery used for manufacturing goods-machinery falling under Chapter 84798970 but CENVAT credit was denied to the appellant on the ground that in certain invoices including invoice dated 29.04.2009 under the name of excisable goods “steel furnitures” has been mentioned with Chapter Heading/Sub-Heading No. 94032010. The department denied the cenvat credit to the appellants by holding that the items are not capital goods as supplier has described it as “steel furniture” and classified it under C.H. 94.03 in the invoice.
On appeal, the Commissioner (Appeals) confirmed this order. The appellants, therefore, approached the Tribunal.
Before the Tribunal, the counsel for the appellant submitted that the judgment of Sarveswh Refractories (P) Ltd. (supra) is distinguishable from the facts of the present case and in the decision of Daya Sugar (supra) passed by the Hon’ble Allahabad High Court, it has been distinguished in holding that it was immaterial if the supplier of the item had wrongly classified the same since, the actual classification and the eligibility for CENVAT credit is dependent on the actual usage of goods and therefore CENVAT credit is admissible to the Appellant.
Accepting the above contentions, Judicial Member Dr. Suvendu Kumar Pati observed that “In referring to a judicial decision of Mangala Ispat Jaipur Pvt. Ltd. Vs. Union of India reported in 2018 (15) GSTL 487 (Raj.), the appellant also argued that judicial discipline in following the judicial precedent would ensure consistency of law and the facts of Sarveswh Refractories (P) Ltd. judgment are well distinguished by the Hon’ble Allahabad High Court where acceptance by the Central Excise Officers of the classification made by the manufacturer was stated to be not questionable at the consumers end but in the instant case, it was wrong noting under the Heading of invoice while description of item sold in the body of the invoice meant for putting the description is proper and legal, that goes with the actual usage of goods. I find force in the submissions of learned Counsel for the appellant and in following judicial discipline set in the case of Daya Sugar and Shree Cement Ltd., the following order is passed.”
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