fiogf49gjkf0d
CENVAT credit — Capital goods pending installation, whether 50% credit can be availed in the subsequent year — Assessee held eligible — Goods lying in the factory for installation — The process of erection was carried out — Thus, capital goods were in possession of manufacturer as per Rule 4(2b) of the CENVAT Credit Rules, 2004 (CCR).
Facts:
The question of law referred to the Larger Bench was, whether an assessee is eligible to avail the credit of balance 50% of the credit in respect of capital goods in the subsequent financial year without installing the same and putting it to use as held by Ispat Industries v. Commissioner, (2006) 199 ELT 509 (Tri.) or the assessee cannot avail credit as held by Parasrampuria Synthetics Ltd. v. Commissioner, (2004) 170 ELT 327 (Tri.-Del.). The issue thus involved related to interpretation of provisions of Rule 4(2)(b) of CCR as to whether the situation of goods would be regarded as possession of capital goods and use for the manufacture of final products in such subsequent years. In Ispat’s case (supra), in Revenue’s appeal before the Bombay High Court, reported at (2012) 275 ELT 79 (Bom.), the High Court held that since the Tribunal had held that the expression ‘possession and use of the manufacture of final products’ have to be read together and would denote that the goods were available for use in the manufacture of final products and since the finding of the fact was that capital goods were under erection process, no substantial question of law had arisen and therefore the appeal was dismissed.
Held:
In terms of the above decision of the Bombay High Court, it was held that the condition under the relevant Rule for taking 50% credit in subsequent financial years when capital goods are lying in the factory for installation and under the process of erection has to be interpreted as capital goods in possession and use for manufacture and accordingly the Division Bench was directed to decide the appeal on merits.
