2017 (2) TMI 1285 - AT - Central Excise

CENVAT credit - cement, steel and steel structural items - Held that - the issue has come up before the Tribunal in the case of Singhal Enterprises Pvt. Ltd. Vs. CC&CE, Raipur 2016 (9) TMI 682 - CESTAT NEW DELHI , where it was held that applying the User Test to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of Capital Goods as contemplated u/r 2(a) of the CCR, hence will be entitled to the Cenvat credit - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against Order-in-Original dt. 18/08/2010 regarding CENVAT credit on cement, steel, and steel structural items.
- Interpretation of Rule 2(a) of the CENVAT Credit Rules, 2004.
- Application of the 'user test' to determine if structural items qualify as capital goods.
- Comparison with previous judgments on similar issues.

Analysis:
The appellant filed an appeal against the Order-in-Original dated 18/08/2010 concerning the availing of CENVAT credit on cement, steel, and steel structural items during the period from December 2008 to July 2009. The appellant, engaged in manufacturing cement and cement clinkers, availed CENVAT credit on various items, including steel and steel structural items. However, the Department disallowed the credit on these specific items, leading to the appeal. The central issue revolved around the interpretation of Rule 2(a) of the CENVAT Credit Rules, 2004, to determine whether the steel structural items qualified as capital goods for availing CENVAT credit.

During the hearing, the Tribunal referred to the decision in the case of Singhal Enterprises Pvt. Ltd. Vs. CC&CE, Raipur, where the 'user test' was applied to ascertain if the structural items could be considered as capital goods. The Tribunal cited the Supreme Court's decision in the case of CCE, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd., emphasizing the importance of the 'user test' in such cases. By applying the 'user test,' it was established that the structural items were used in the fabrication of support structures for capital goods like kilns, conveyors, and furnaces, essential for the smooth functioning of machinery. Consequently, the Tribunal concluded that the structural items fell within the definition of capital goods under Rule 2(a) of the CENVAT Credit Rules, making them eligible for CENVAT credit.

The Tribunal also cited several other cases, such as CCE, Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd. and Prism Cement Ltd. Vs. CE&ST, to support its decision based on the settled legal position. In light of the consistent interpretation across various judgments and the application of the 'user test,' the Tribunal found no impediment to allowing the appeal of the appellant. The appeal was granted, with any consequential reliefs provided, and the miscellaneous application was disposed of accordingly.