2025-VIL-2123-CESTAT-CHE-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Availment of CENVAT Credit on capital goods and input services procured by works contractor; Extended period of limitation - Appellant set up an LPG plant and availed CENVAT credit on the capital goods and input services used in the setting up of the plant - Dept issued SCN proposing to deny the CENVAT credit availed by the appellant - Adjudicating Authority confirmed the demand on the ground that the works contractor who procured the capital goods, was not eligible to avail CENVAT credit under Explanation 2 to Rule 2A of the Service Tax Valuation Rules, and that the input services used for setting up the plant were not eligible for credit post the amendment to the definition of "input service" w.e.f. 01.04.2011 - Whether the denial of CENVAT credit availed on duty paid goods claimed as 'capital goods' is valid – HELD - The goods procured by works contractor and used in the appellant's factory for the production of LPG qualify as 'capital goods' under the CENVAT Credit Rules, 2004. The fact that works contractor was mentioned as the 'buyer' and the appellant as the 'consignee' in the invoices does not affect the appellant's eligibility to avail CENVAT credit on such capital goods. The ownership of the goods during the subsistence of the works contract is not a relevant criterion for denying the credit. The appellant is eligible to avail CENVAT credit on the capital goods received in its premises - The demands confirmed in the impugned order are set aside and the appeal is allowed - Whether the rejection of CENVAT credit availed on input services is justified – HELD - The input services used for setting up the LPG plant would not be eligible for CENVAT credit post the amendment to the definition of "input service" w.e.f. 01.04.2011, which specifically excluded services used for the laying of foundation or making structures for the support of capital goods. The denial of credit on such input services by the Adjudicating Authority is correct - Whether the Revenue has established 'suppression' while invoking the extended period of limitation - HELD - The appellant had reflected the availment of CENVAT credit in its ER-1 returns, and there was no denial of payment of duty or filing of returns. The Tribunal relied on various judicial precedents to hold that there was no 'suppression' of facts by the appellant to invoke the extended period of limitation. Accordingly, the demand is set aside on the ground of limitation, and consequently, the interest and penalty also cannot be sustained.
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