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2016 (10) TMI 675 - AT - Central ExciseDenial of CENVAT credit - demand of duty with equal amount of penalties - CTD bars, TMT bars - whether these goods were inputs or capital goods? - whether the appellant is eligibile for cenvat credit of duty paid on CTD bars, TMT bars, etc. used in the manufacture of fabrication of various structures inside their factory? - Held that - similar issue stands decided in the case of M/s. Singhal Enterprises Private Limited Versus The Commissioner Customs & Central Excise, 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 under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit. CTD bars, TMT bars held as capital goods - CENVAT credit allowed - appeal allowed - decided in favor of appellant.
Issues involved:
1. Eligibility of cenvat credit on CTD bars, TMT bars, etc. used in the manufacture of fabrication of various structures inside the factory. Detailed Analysis: The appeals revolved around the eligibility of the appellants to claim cenvat credit on CTD bars, TMT bars, etc. used in the fabrication of structures within their factory premises. The dispute arose as these items were neither classified as inputs nor capital goods. The Original Authority denied the credit availed on these items, imposing penalties as well. On appeal, the ld. Commissioner (Appeals) upheld the original orders, leading to the present appeals before the Tribunal. The main contention from the appellants' side was that the M.S. items used in the fabrication of structural items were integral to the operation of specific capital machinery in their Sponge Iron Plant. These structures were crucial for supporting machines like furnaces, chimneys, and material handling systems, without which the manufacturing process could not take place. The appellants relied on various precedents to support their argument. On the other hand, the Revenue argued that the iron and steel items in question were of a general nature, falling under Chapter 72 and 73, and did not qualify as inputs or capital goods. They cited relevant legal judgments to support their position, emphasizing that the items in question could not be considered for cenvat credit. After hearing both sides and examining the appeal records, the Tribunal focused on the key issue of the appellants' eligibility for cenvat credit on the mentioned items used in fabricating support structures within their factory. The Tribunal referred to a recent decision in the case of Singhal Enterprises Ltd., where a similar set of facts was examined, and credit was deemed admissible. The Tribunal analyzed the user test to determine whether the structural items qualified as capital goods, ultimately concluding that they fell within the ambit of Capital Goods as per Rule 2(a) of the Cenvat Credit Rules, entitling the appellants to claim the credit. Moreover, the Tribunal addressed the Revenue's reliance on various legal precedents, highlighting that the cases cited were distinguishable from the present situation. The Tribunal emphasized that upon usage, the steel items in question became an integral part of the capital machinery, aiding in its operation. The Tribunal's detailed analysis and application of legal principles led to the conclusion that the impugned orders denying the credit could not be sustained, resulting in the appeals being allowed.
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