The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that cenvat credit cannot be denied on ISO tank used for packing di-methyl sulphate.
The bench of Ramesh Nair (Judicial Member) and C L Mahar (Technical Member) has observed that merely because the appellant under a belief treated the ISO tank as capital goods and taken the credit under that account does not make them disentitled for the Cenvat credit, if otherwise available on ISO tank has input.
Background
The appellant/assessee has initially taken the Cenvat credit on ISO tank considering it as “Capital Goods”, however later they realised that the credit should have been taken under “inputs” account which they have claimed during the adjudication of the case before the adjudicating authority.
However the adjudicating authority has not considered their submission and holding that the ISO tank is not capital goods, therefore, the credit was denied.
Many circulars have clarified that the assessee is entitled for the Cenvat credit in respect of durable packaging material if the value thereof is included in the assessable value of the final product. In view of the board circulars the appellant are clearly entitled for the Cenvat credit.
The assessee submitted that merely because initially the appellant had availed the Cenvat credit under capital goods account credit cannot be denied as the same is eligible as inputs.
The adjudicating authority has denied the Cenvat credit on ISO Tank on the ground that the appellant has taken credit under capital goods account and the ISO tank is not capital goods. However, the appellant realising their mistake claimed the Cenvat credit on packaging material i.e. ISO tank considered as input during the adjudication process.
Conclusion
The tribunal has held that the Commissioner should have examined whether such ISO tanks fall under the category of inputs and accordingly decided the matter on that basis. The Commissioner should re-examine the matter as observed by us above and pass a fresh order.
The CESTAT allowed the appeal and remand the matter to the adjudicating authority for passing a fresh order.
Case Title: Aarti Industries Ltd. Versus Commissioner of C.E. & S.T.-Surat-i
Case No.: Excise Appeal No. 10451 of 2018 – DB
Date: 18.09.2024
Counsel For Appellant: Prasannan Namboodiri
Counsel For Respondent: Tara Prakash
