2014 (7) TMI 881 - HC - Central Excise

Cenvat Credit - capital goods - structural steel items viz., M.S.Plates, Angles, Channels and HR Sheets used for civil construction activity - Held that - This Court in the case of India Cements Limited 2011 (8) TMI 399 - MADRAS HIGH COURT applied the principles laid down in the decision of Commissioner of Central Excise Jaipur V. Rajasthan Spinning & Weaving Mills Ltd. 2010 (7) TMI 12 - SUPREME COURT OF INDIA and held that the Tribunal was justified in allowing the assessee's contention in respect of the very same assessee. - credit allowed - decided in favor of assessee.

Summary

Issues:
1. Interpretation of Rule 57Q of the Central Excise Act, 1944 regarding the eligibility of structural steel items as capital goods for credit.
2. Whether the items used for civil construction activity qualify as capital goods under Rule 57Q.

Issue 1: Interpretation of Rule 57Q - Eligibility of Structural Steel Items:
The Civil Miscellaneous Appeal challenged an order by the Customs, Excise, and Service Tax Appellate Tribunal regarding the eligibility of structural steel items like M.S. Plates, Angles, Channels, and HR Sheets as capital goods for credit under Rule 57Q of the Central Excise Act, 1944. The Tribunal considered the user test and held that the items in question were used in the erection of various machineries, making them integral components of the manufacturing plant. The Tribunal referred to previous court decisions and clarified that items used for erection of capital goods are eligible for CENVAT credit. The Tribunal emphasized that the items were essential for the functioning of the manufacturing plant and fell within the ambit of capital goods as per the rules.

Issue 2: Qualification of Items for Civil Construction Activity as Capital Goods:
The appeal involved a dispute where the Department issued a show cause notice challenging the classification of items like M.S. Angles, Beams, Channels, and TMT bars as capital goods used in civil construction activity. The Assessing Officer confirmed a demand against the assessee, leading to an appeal before the Appellate Tribunal. The Tribunal analyzed the usage of the items and concluded that they satisfied the user test, being essential components for the erection of new plant and machinery in the factory. The Tribunal referred to precedents and established that the items were indeed capital goods eligible for credit. The Tribunal rejected the Revenue's appeal, emphasizing that the items were crucial for the machinery's functioning and fell within the definition of capital goods as per relevant legal provisions.

Conclusion:
The High Court dismissed the Revenue's appeal, upholding the Tribunal's decision that the structural steel items used in the erection of machinery for manufacturing plants qualified as capital goods eligible for credit under Rule 57Q. The Court relied on established legal principles, previous court decisions, and the user test to support its judgment. The consistent application of rules and precedents led to the rejection of the Revenue's appeal, confirming the eligibility of the items in question as capital goods.