CENVAT Credit On Tippers Can't Be Denied Due To Purchase Before Inclusion As Capital Goods: CESTAT Kolkata

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that CENVAT credit on tippers cannot be denied merely because the vehicles were received before tippers were brought within the definition of capital goods.

The tribunal observed that eligibility for credit must be examined when the vehicles are put to use for rendering output services.

A bench of Judicial Member Ashok Jindal and Technical Member K. Anpazhakan allowed an appeal filed by Libra Business Private Limited. It set aside a demand of about ₹1.04 crore along with interest. The bench also dropped the penalty imposed on the company.

“The eligibility of CENVAT Credit on the Tippers is required to be considered when the said vehicles are put to use for rendering the output service,” the bench observed.

Libra Business, which provides mining and goods transport agency services, purchased 25 Volvo tippers during February and March 2010. It availed CENVAT credit on the excise duty paid on those vehicles.

Revenue authorities denied the credit. They argued that tippers were included within the definition of eligible capital goods only from 22 June 2010, whereas the vehicles had been received earlier.

The company argued that the tippers were registered and put to use only after 22 June 2010. It also pointed out that the disputed credit was utilised only after that date.

The tribunal noted that the vehicles were registered after 22 June 2010. It further recorded that the credit had not been utilised before then.

“Thus, considering the fact that the said vehicles/Tippers were registered and put to use only after 22.06.2010, we do not find any infirmity in the availment of credit on such Tippers by the appellant,” the bench held.

The tribunal further found that the credit had been disclosed in statutory returns. It noted that the issue had also been examined during a departmental audit. In these circumstances, it held that there was no basis to invoke the extended limitation period.

“As the necessary ingredients for invocation of the proviso to Section 73(1) of the Finance Act, 1994 are absent in this case, we hold that the extended period of limitation cannot be invoked against the appellant in the facts and circumstances of the case,” the bench observed.

Holding that the credit had been rightly availed, the tribunal set aside the demand and interest. It also dropped the penalty and allowed the appeal with consequential relief.

For Appellant: Narayan Agarwal, Chartered Accountant

For Revenue: Argho Mukherjee, Authorized Representative