The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the CENVAT credit of excise duty demand on iron and steel products used in the manufacture of final products.
Corporate Ispat Alloys Limited, the appellant assessee claimed that they had availed CENVAT credit on iron and steel products that were used in the manufacture of capital goods in their factory for the manufacture of final products, on which they paid Central Excise duty.
The assessee appealed against the order passed by the Commissioner of Central Excise, Bolpur for confirming the demand of duty of Rs.89,42,645/- along with interest and imposed an equal amount of duty as a penalty.
During the hearing of this appeal, none appeared on behalf of the assessee and P. K. Ghosh appeared on behalf of the department.
In the written submission of the assessee, the assessee stated that Angles, Channels, Beams, Joists, Sheets, Plate, Coils, etc used for furnace equipment and furnace structure, raw material handling system, and pollution control equipment, are eligible for credit as ‘inputs, used in the manufacture of capital goods.
The counsel for the department contended that the assessee was not entitled to avail credit on the Angles, Channels, Beams, Joists, Sheets, Plate, Coils, etc, as these goods fall under chapter 72 and they cannot be defined as ‘Capital goods’ as per definition under Rule 2(a) of the CENVAT Credit Rules (CCR), 2004.
The Bench observed that Angles, Channels, Beams, Joists, Sheets, plates, Coils, etc used in the manufacture of furnace equipment and furnace structure, raw material handling system, and pollution control equipment, are eligible for credit as ‘inputs.
The two-member bench comprising Muralidhar (Judicial) and Anpazhakan (Technical) held that demand itself was not sustainable and the question of demanding duty or imposing penalty does not arise.
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