2016 (11) TMI 1099 - AT - Central Excise

Denial of CENVAT credit - subject goods have been used for manufacturing supporting structures - Held that - The matter stands covered by the Tribunal s order in the appellant s own cases M/s. Monnet Ispat & Energy Ltd. Versus Commissioner of Central Excise, Raipur 2016 (1) TMI 917 - CESTAT NEW DELHI where it was held that the allegation in the show cause notice that steel items used by the appellant are neither components nor spares nor accessories is not sustainable. Applying the principle of user test laid down by the Hon ble Supreme Court in Jawahar Mills case (2001 (7) TMI 118 - SUPREME COURT OF INDIA ) the angles, beams and channels used in the making and fabrication of these capital goods are found eligible for Cenvat credit. CENVAT credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of Cenvat Credit on the ground of goods used for manufacturing supporting structures.
- Interpretation of the definition of capital goods and input under Cenvat Credit Rules, 2004.
- Applicability of previous tribunal orders and judicial precedents supporting the appellant's case.

Analysis:

1. Denial of Cenvat Credit: The appellant's Cenvat Credit amounting to ?77,30,780 and ?1,39,13,197 was denied by the Commissioner based on the usage of goods for manufacturing supporting structures. The appellant argued that the steel structures are a technological requirement for the sponge iron plant and are used for the fabrication and installation of components and accessories necessary for commercial production. An independent Chartered Engineer certified the usage of these items in the manufacture of capital goods.

2. Interpretation of Definitions: The appellant contended that the disputed items are accessories/parts of capital goods as defined under Rule 2(a) of the Cenvat Credit Rules, 2004. Alternatively, they argued that the items also fall under the definition of input as per Explanation 2 of Rule 2(k). Previous tribunal orders, Final Order No. A/52567/2015-EX (DB) dated 03.08.2015 and Final Order No. A/52244/2016-EX (DB) dated 29.06.2016, were cited in favor of the appellant's case.

3. Judicial Precedents and Tribunal Orders: The Tribunal's previous orders in the appellant's cases supported the appellant's position, along with judicial precedents such as Commissioner of C.EX., Coimbatore versus Jawahar Mills Ltd. and Commissioner of Central Excise Jaipur v/s Rajasthan Spinge Weaving Mills Ltd. The Hon'ble Madras High Court's decision in the case of India Cement Ltd. Vs CESTAT, Chennai was also referenced, emphasizing the importance of the items in question for the erection and functioning of machinery.

4. Final Decision: Considering the legal position, judicial observations, and precedents cited, the Tribunal set aside the impugned order and allowed both appeals in favor of the appellant. The cross objections were also disposed of accordingly, providing consequential relief to the appellant. The judgment was pronounced in open court on 10.11.2016 by Member (Technical) Ashok K. Arya.