Exemption available to Supply for Specific Govt. Project: CESTAT allows Cenvat Credit on Capital Goods [Read Order]

Supply - Govt. Project - CESTAT - Cenvat credit - Capital Goods - taxscan

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) New Delhi bench has held that exemption available to supply for a specific government project and allows Cenvat credit on Capital Goods.

The appellant, M/s K K Spun India Ltd. is engaged in the manufacturing of RCC pipes. The appellant had availed Cenvat credit on receipt of capital goods totaling Rs. 46,85,471/- and removed some of the capital goods, on payment of duty totaling Rs. 9,40,799/.

The revenue noticed that the appellant was clearing their finished goods for the project ‘Khan River Diversion Project’ of the Water Resources Department, Government of Madhya Pradesh, and availed exemption. Thus, the appellant is not entitled to avail of Cenvat credit as per Rule 6(4) CCR. Accordingly, the revenue confirmed the demand for Cenvat credit along with interest and an equal amount of penalty under Rule 15(1) of CCR.

The Commissioner (Appeals) allowed the appeal in part by confirming the demand of Cenvat credit with interest, and reducing the penalty amount to Rs. 1 lakh. Being aggrieved the appellant filed an appeal before the Tribunal.

The counsel for the appellant submitted that the finished products manufactured by the appellant are not exempted, but rather are dutiable at 10% as per CTH 68109990 under the Central Excise Tariff Act. Thus, the finished product of the appellant is taxable in the normal course. Only, for supplies made for a specific project under Notification No. 12/2012 – CE, the exemption is available.

The Coram of Mr. Anil Choudhary, Member (Judicial) while allowing the appeal has held that “I find that the appellant is entitled to take Cenvat credit on the capital goods, as their finished goods falling under CTH 68109990 are dutiable under the Central Excise Tariff Act. Thus Rule 6(4) of CCR is not attractive. Thus, I hold that the show cause notice is mis-conceived. I further hold that the appellant has rightly taken Cenvat credit on the capital goods”.

Mr. Kamal Jeet Singh and Ms. Tamanna Alam appeared on behalf of the appellant and the respondents respectively.

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