M/s Sadguru Sri Sri Karkhana Ltd. Vs. Commissioner of CGST, Kolhapur

Order date: 16 March 2023

Facts: 

• The Appellants, M/s Sadguru Sri Sri Karkhana Ltd., are engaged in manufacture of sugar and its by-product molasses. They had availed CENVAT credit of structural material used for erection of structural towers outside the factory premises for transmission of electricity and laying of foundation for structures for support of capital goods.
• The anti-evasion wing raised objection on the availment of credit and the credit was therefore, reversed. But despite such reversal show cause notice was issued on the note that the department pointed it out to be inadmissible as per definition of input service in Rule 2(I) of Cenvat credit Rule, 2004. The show cause notice was issued to the appellant proposing to deny and recover the Cenvat credit of Rs. 24,95,230/- by invoking extended period of limitation. 

Issue: 

• Whether the Cenvat credit availed by the appellants on the structural steel used for erection of poles for transmission of electricity from MSEB feeder to factory and vice versa, and for supporting other capital goods is admissible? 

Order : 

• The Tribunal observed that the poles might be outside the factory but for the purpose of manufacturing activity inside the factory. The location is not of much relevance here but the purpose. It is directly related to manufacture of final product in the factory. Therefore the credit of Rs.12,27,850/- in respect of the goods in issue is admissible in terms of Rule 2(a) ibid.
• So far as steel items are concerned, it is the case of the appellant that they have been used for supporting structure of the machinery and also for erection of poles for transmission of electric energy from MSEB feeder to factory and vice versa and since nothing contrary has been produced on record anywhere therefore the same is treatable as accessories and would fall within the definition of capital goods. Therefore the credit of Rs.2,49,920/- availed on MS Beam, MS channels is also admissible. 
• Further, availment of Cenvat credit has been duly declared by Appellant in their books of accounts, Cenvat credit registers and ER-1 returns as well which they filed from time to time. Therefore no suppression can be alleged against the appellant. Since complete information was given in statutory returns the normal period of one year would be applicable whereas the proceedings are initiated at a later date and hence the demand is barred by limitation.
• In view of the same, the demand is set aside on merits as well as on ground of limitation.