In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) in Ahmedabad has held that an ISO Tank used for transporting Di-Methyl Sulphate ( DMS ) is eligible for CENVAT credit, even when initially claimed as capital goods, provided the ISO Tank qualifies as an input.
The two-member bench of Ramesh Nair, Member (Judicial) and C.L. Mahar, Member (Technical) observed that the appellant could avail CENVAT credit on an ISO Tank used to transport Di-Methyl Sulphate (DMS) from its factory to consignee premises.
The appellant initially claimed credit under “capital goods,” later realising that the ISO Tank should be considered as an “input.” The adjudicating authority denied the credit, holding that the ISO Tank did not qualify as capital goods.
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The Tribunal, however, clarified that if the ISO Tank qualifies as an “input,” the appellant should be entitled to the CENVAT credit, even if it was initially claimed under capital goods.
The Court observed that, “We are of the prima facie view that merely because the appellant has taken the credit under the capital goods but if it is available under input, the credit should be extended.”
The Tribunal found that the adjudicating authority failed to evaluate the ISO Tank as an input and violated the principles of natural justice by not considering this aspect. The order was set aside, and the matter was remanded to the adjudicating authority for re-examination.
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The tribunal bench thus directed that the adjudicating authority must consider relevant circulars and judgments cited by the appellant, ensuring a fair hearing and decision within a month.
The tribunal ruling establishes that durable packaging material, such as an ISO Tank used for transporting goods, can qualify for CENVAT credit under “inputs,” provided it meets the conditions stipulated under the CENVAT Credit Rules. The judgement reassures that procedural mistakes (such as claiming the credit under capital goods instead of inputs) should not deny an assessor the benefit of legitimate credit if the claim is otherwise valid.
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