Vandana Global Rs 2500 Crore bonanza for Central Excise
NEW DELHI. Larger Bench of CESTAT has pronounced Ruling on 30.4.2010 in case of Vandana Global holding that the term “capital goods” cannot include plant, structures embedded to earth overruling the decision in case of Bhushan Steel and Strips Ltd and credit is not admissible on cement, angles, channels, Centrally Twisted Deform bar(CTD) or Thermo Mechanically Treated bar(TMT) and other items under Credit Rules as these are neither inputs nor capital goods. As a fallout of the Ruling; the demands of around Rs 2500 Crore are expected to be confirmed as the litigation on the issue is going all-over India.
In case of Vandana Global Limited Versus Commissioner of Central Excise, Raipur Appeal No. E/1036/2008 the following questions were referred to Larger Bench
(a) Whether the term “capital goods” can include plant, structures embedded to earth?
(b) Whether the goods like angles, joists, beam, channels, bars, flats which go into fabrication of such structures can be treated as ‘inputs’ in relation to their final products as inputs for capital goods, or none of the above?
(c) Whether the credit can be allowed in respect of goods like angles, joists, beam, channels, bars, flats which go into fabrication of such structures and plant?
Larger Bench has held that the credit is not admissible to Industry and the decision in case of Bhushan Steel & Strips Ltd. Versus Commissioner of Central Excise, Raigad was not correct in law.
In case of Bhushan Steel & Strips it was held that Credit could be availed of duty paid on Cement and CTD bars used in factory for foundation of machine, plants etc, and in tanks, cellars as well as other structures as they are support of capital goods/ component of plant.
CENVAT Credit Rules have also been amended by CENVAT Credit (Amendment) Rules, 2009 notified vide Central Excise Tariff Notification No.22/2009 and an Explanation as under has been added in the definition of “input” to deny credit on cement, angles, channels, Centrally Twisted Deform bar(CTD) or Thermo Mechanically Treated bar(TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods
“Explanation 2.- Input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer but shall not include cement, angles, channels, Centrally Twisted Deform bar(CTD) or Thermo Mechanically Treated bar(TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods”
