2025-VIL-739-CESTAT-DEL-CE
  1. Home
  2. 2025-VIL-739-CESTAT-DEL-CE

CENTRAL EXCISE CESTAT Cases

Central Excise - CENVAT credit on capital goods, Captive power plant, items of Iron and Steel - Appellant availed CENVAT credit on various inputs, capital goods, and input services used in the installation and operation of a captive power plant set up within its factory premises – Denial of CENVAT credit on the grounds that: the appellant was not the manufacturer of the captive power plant and hence not entitled to the credit, the credit on "structural items of Iron and Steel" used for constructing the supporting structure of the chimney was not eligible, and the credit on capital goods and inputs transferred to the captive power plant unit, which was maintained as a separate unit was required to be reversed under rule 3(4)/3(5) of the CENVAT Credit Rules, 2004 - Whether the appellant was eligible to avail CENVAT credit on the parts, components and accessories used in the installation of the captive power plant by the contractor – HELD - The ownership of the goods is irrelevant for the purpose of CENVAT credit eligibility. The appellant being the manufacturer of the final products, was entitled to the credit even though the actual installation was done by the contractor - The finding recorded by the Commissioner that at the time of receipt of “capital goods” in the factory for use in installation of the Captive Power Plant, it is the Contractor who is the real manufacturer of the said plant and would eligible to take credit and not the appellant is, therefore, not correct - The Tribunal, relying on its earlier decisions in Hindustan Zinc Ltd. and Gujarat Ambuja Cements Ltd., held that the appellant is eligible to avail the CENVAT credit on the parts, components and accessories used in the installation of the captive power plant by the contractor - Once the demand of CENVAT credit is not sustainable, the recovery of interest does not arise – The impugned order is set aside and the appeal is allowed - Whether the "structural items of Iron and Steel" used for constructing the supporting structure of the chimney would qualify as "accessories" eligible for CENVAT credit as capital goods – HELD - the "structural items of Iron and Steel" used for fabrication and installation of the chimney in the captive power plant were an integral part of the capital goods and eligible for CENVAT credit. These items were necessary for the proper and smooth functioning of the capital goods (chimney) and hence, qualified as "accessories" under the CENVAT Credit Rules - Whether the CENVAT credit on capital goods and inputs transferred to the captive power plant unit, which was maintained as a separate unit for compliance with section 80IA of the Income Tax Act, was required to be reversed under rule 3(4)/3(5) of the CCR, 2004 – HELD - The maintenance of separate books of accounts for the captive power plant unit was only for the purpose of compliance with the statutory requirements under section 80IA of the Income Tax Act, and did not mean that it was a separate business entity. The captive power plant was located within the factory premises of the appellant and all the inputs and capital goods were received and consumed within the registered premises. Therefore, the provisions of rule 3(4)/3(5) for reversal of CENVAT credit on removal of goods were not applicable.
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Tax Vista

Your Biweekly Tax Recap

By Dr. G. Gokul Kishore

Weekly Summary

VIL Video

Credit Notes ITC Reversal in IMS…
By Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?