By TIOL News Service

MUMBAI, FEB 11, 2019: THE appellant is a manufacturer of galvanized wire, HTGS wire, G.S. earth/GI stay wire and is availing CENVAT credit on inputs, input services and capital goods. EA Audit took a view that the appellant had availed inadmissible credit of Rs.30,34,534/- as on various input services since being in relation to civil works and fabrication of support to capital goods.

Appellant reversed credit of Rs.21,95,531/- without utilisation and without challenging its admissibility. However, they disputed the admissibility of credit of Rs.8,39,003/- and also challenged the invocation of the extended period of limitation.

The appellant having failed to get any relief at the adjudication as well as the lower appellate stage is before the CESTAT.

It is submitted that pipeline fabrication work, EOU crane, electrical installation, earthing connection, insulation of acid plant etc. were done in relation to the manufacture of final products and those are eligible for CENVAT credit in terms of Rule 2(l) of CCR, 2004. Reliance is also placed on the decision in Aditya College of Competitive Exam - 2009-TIOL-2216-CESTAT-BANG to emphasize that invocation of extended period without any conscious or deliberate suppression of facts or misstatement, is not sustainable when the same was based on audit objection.

The AR supported the reasoning in the order of the Commissioner (Appeals) and pleaded that the impugned order needed no interference.

The Single Member Bench considered the submissions and inter alia observed -

+ Paragraph no. 5 of the show-cause notice indicates that the said services had been utilised in laying of foundation or making structures for support of capital goods as appears from the work undertaken.

+ The very use of word "appears" indicates that those Departmental Authorities have suspected the conduct of appellant and taken the words of appellant, if at all done at Exit Interview, as extra judicial confession…

+ Further as found from the nature of services, electric installation, preparation of earthing system for electricity and insulation of acid container should be regard as "safety measure" for protection of factory and its workers who are engaged in or in relation to the manufacturing process, the same cannot be considered as civil construction or support structure.

+ It cannot be said that only because audit party had found some credit availed as inadmissible, suppression of fact is made out. Further, it is not established that appellant had any malafide intention to suppress its duty liability from the department.

The appeal was allowed.

(See 2019-TIOL-445-CESTAT-MUM)