2017 (8) TMI 1481 - AT - Central Excise

CENVAT Credit - input - HR Plates, MS Beam, MSAngles, MS Channels, Beams etc. used for fabrication of storage tanks within the factory - Held that - The issue has been recently considered by the Principal Bench at Delhi in Singhal Enterprises Pvt. Ltd s case 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 under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit. Since these items were used as structure to hold the capital goods, supported by Chartered Engineer s Certificate, hence, are eligible to CENVAT credit - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against order-in-appeal denying CENVAT credit on certain materials used for fabrication of storage tanks within the factory premises.

Analysis:
The appellant availed CENVAT credit on materials like HR Plates, MS Beam, MS Angles, etc., used for fabricating storage tanks. A Show Cause Notice was issued for recovery of credit, leading to confirmation of demand with interest and penalty. On appeal, the Commissioner allowed partial credit but upheld the denial for the remaining amount. The appellant argued that the items were used for fabrication of structures supporting storage tanks, making them eligible for credit as per Rule 2(k) of CCR, 2004. Reference was made to a judgment by the Principal Bench at Delhi to support this claim.

The Revenue supported the findings of the Commissioner (Appeals), leading to a detailed analysis by the Tribunal. The Tribunal referred to a previous decision by the Principal Bench at Delhi regarding the admissibility of credit on structural steel items used for fabricating support structures. The Tribunal discussed the applicability of an amendment to the definition of 'Input' and cited a Larger Bench decision which denied credit for iron and articles used as supporting structures. However, the Tribunal highlighted a judgment by the Gujarat High Court stating that the amendment could not be applied retrospectively.

The Tribunal further referenced a Supreme Court decision concerning the 'user test' to determine if goods could be considered as capital goods. Applying this test, it was concluded that the structural items used for fabrication of support structures for capital goods fell within the definition of 'Capital Goods' under Rule 2(a) of the Cenvat Credit Rules. Therefore, the Tribunal held that the items in question were eligible for CENVAT credit as they were used as structures to hold capital goods, supported by a Chartered Engineer's Certificate.

In light of the legal analysis and settled position of law, the Tribunal set aside the impugned order, allowing the appeal with consequential relief as per law.