Hindalco Industries Limited, one of India’s leading producers of aluminium and copper, has been deemed eligible for Cenvat credit on inputs used in fabricating capital goods.
The decision was made by the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), West Zonal Bench at Ahmedabad.
The case revolved around Hindalco’s claim for Cenvat credit on High-Rate Mild Steel ( H.R. M.S. ) and Stainless Steel ( S.S. ) plates utilised in the construction of capital goods, particularly within their Unit Birla Copper, located in Bharuch, Gujarat.
The appellant company, represented by Shri Anand Nainawati argued that these materials were integral to the manufacturing process, thus making them eligible for Cenvat credit under the Central Excise Act, 1944 and the Cenvat Credit Rules, 2004.
Initially, Hindalco’s claim for Cenvat credit was denied by the Commissioner of Central Excise, Bharuch citing immovability and timing as grounds for rejection. However, the company pursued the matter ultimately leading to a hearing before CESTAT.
The appellant argued that the materials in question were essential components in the fabrication of capital goods such as storage tanks, chimneys, machinery and support structures within their manufacturing facility.
The crux of Hindalco’s argument rested on the interpretation of Cenvat Credit Rules, particularly Rule 2(k) and Rule 2(a), which define the scope of eligible inputs and capital goods for tax credit purposes. They contended that the immovability of the fabricated goods should not preclude them from qualifying as capital goods under the Cenvat Credit Rules, 2004.
The respondent revenue, Commissioner of Central Excise ( C.C.E. ), Bharuch, represented by Shri Tara Prakash argued that Cenvat credit was rightly denied due to the delay in availing credit, and the fabricated goods, though used in manufacturing, were immovable and thus not eligible for credit as inputs or capital goods.
The CESTAT rejected the denial of Cenvat credit based on immovability and timing, confirming the appellant’s right to claim cenvat credit on inputs used in fabricating capital goods.
In result, the two-member bench comprising Mr. Ramesh Nair ( Judicial Member ) and Mr. Raju ( Technical Member ) concluded that Hindalco Industries Limited is eligible for Cenvat credit on inputs used in fabricating capital goods. The denial based on immovability and timing was rejected and the appeal was allowed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
