2017 (8) TMI 1402 - AT - Central Excise

CENVAT Credit - inputs - H.R.Plates, Sheets, Flats, Angles, M.S.Joist, M.S.Channels, Oxygen Gas, Industrial Gas - Held that - Reliance placed in the case of Mangalam Cement Ltd. vs. CCE, Jaipur 2017 (1) TMI 141 - CESTAT NEW DELHI. , where it was held that the controversy can be laid to rest by making a reference to the decision of the Apex Court in the case of CCE, Jaipur vs. Rajasthan Spinning & Weaving Mills Ltd. 2010 (7) TMI 12 - SUPREME COURT OF INDIA , wherein the Hon ble Supreme Court has considered an identical issue of steel plates and MS Channels used in the erection of chimney for diesel generating set - The credit stands allowed in the light of Rule 57Q of the erstwhile Central Excise Rules, 1944. Applying the User Test to the facts in hand, there is 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 under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit. Appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against Order-in-Original denying Cenvat credit for certain items used in manufacturing; Interpretation of capital goods under Cenvat Credit Rules.

Analysis:
The appeal was filed against Order-in-Original No. CCE/BBSR-II/No.29-Commr./2005 dated 26.09.2005 covering the period from May 2004 to February 2005. The respondent was involved in manufacturing Sponge Iron & Billets under Chapter Heading 72 of the Central Excise Tariff Act, 1985, along with operating a Power Plant. The respondent installed an integrated steel plant at Hirma and claimed Cenvat credit for various items used, which was allowed except for welding electrodes. The department challenged this denial of credit, leading to the appeal.

During the hearing, it was noted that similar issues had been addressed by the Tribunal in other cases such as Singhal Enterprises Pvt. Ltd. vs. CCE, Raipur, Ultratech Cement Ltd. vs. CCE, Jaipur-I, and Mangalam Cement Ltd. vs. CCE, Jaipur. The Tribunal referred to the decision of the Apex Court in the case of CCE, Jaipur vs. Rajasthan Spinning & Weaving Mills Ltd., where the user test for determining capital goods was discussed. Applying this test, it was found that the structural items used for support structures in the fabrication of capital goods qualified as capital goods under Rule 2(a) of the Cenvat Credit Rules. The structural items were considered parts of relevant machines, falling within the definition of capital goods, including components, spares, and accessories.

Based on the precedent and the application of the user test, the Tribunal upheld the impugned order, dismissing the appeal filed by the Revenue. The decision was made in line with the reasoning provided in the impugned order, indicating no grounds for interference. The judgment was dictated and pronounced in the Open Court, with the appeal being resolved in favor of the respondent based on the interpretation of capital goods under the Cenvat Credit Rules.