CESTAT Allows CENVAT credit Even If Goods Were not Classified as "Capital Goods" By The Supplier
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) consisting of Dr. Suvendu Kumar Pati (Judicial Member) has allowed the CENVAT credit even when the goods were not classified as "capital goods" by the supplier. The appellant/assessee has received invoices from the supplier which were of the nature of components of machinery used for...
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) consisting of Dr. Suvendu Kumar Pati (Judicial Member) has allowed the CENVAT credit even when the goods were not classified as "capital goods" by the supplier.
The appellant/assessee has received invoices from the supplier which were of the nature of components of machinery used for manufacturing goods-machinery falling under Chapter 84798970, but CENVAT credit was denied to the appellant on the ground that in certain invoices under the name of excisable goods, "steel furniture" has been mentioned with Chapter Heading/Sub-Heading No. 94032010.
The adjudicating authorities refused the credits, holding that the supplier of the goods had classified the goods under Chapter 94032010 and goods falling under that chapter are not covered within the definition of "capital goods" as provided in Rule 2(a) of the CENVAT Credit Rules, 2004.
The denial of CENVAT credit to the appellant was confirmed by the Commissioner (Appeals) after CESTAT remanded the matter back to the Commissioner (Appeals).
Counsel for the appellant argued that when classification by the supplier was wrong, eligibility for CENVAT credit was to be decided on the basis of actual usage of the goods.
Counsel for the appellant highlighted the sample invoice and stated that, in a normal course, staff in-charge of preparation of the invoice put the heading and sub-heading in the invoice mechanically with a broad description for which an error, in reflecting the name of goods and Chapter Heading, had occurred, but in the body of the invoice, where the name of the articles was mentioned, they put the correct description.
On the other hand, the authorised representative for the respondent-department argued that the declared classification by the manufacturer when accepted by the Central Excise Officer, consumer cannot get classification changed to any other Heading and therefore interference in the order passed by the Commissioner (Appeals) by the CESTAT was uncalled for.
The CESTAT relied on the decision of the Allahabad High Court in the case of Daya Sugar, reported in 2015 (316) ELT 394, in which it was held that it was immaterial if the supplier of the item had made a wrong classification; the actual classification and the eligibility for CENVAT credit were dependent on the actual usage of goods, and therefore CENVAT credit was admissible to the appellant.
Case Title: M/s Gelnova Laboratories (I) Pvt. Ltd. Versus Commissioner of Central Excise
Citation: Excise Appeal No. 85309 of 2019
Counsel For Appellant: Advocate Sunil Agrawal
Counsel For Respondent: Superintendent Sanjay Hasija