2016 (12) TMI 274 - AT - Central Excise

CENVAT credit - various structural materials such as angles, channels, beams, etc. as well as welding electrodes - structural items used in the erection and maintenance of support structure of the capital goods such as induction furnace, power plant, etc. in the manufacturing plant for sponge iron. Input such as oxygen gas, welding electrodes, etc/ were used for repair and maintenance purpose - Held that - reliance placed on the decision of the case of Singhal Enterprises Vs. CCE 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 - CENVAT credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of cenvat credit on structural materials and welding electrodes used in the manufacturing plant for sponge iron.
- Denial of credit by the Department through a Show Cause Notice.
- Confirmation of duty demand by the original authority and subsequent upholding in the impugned order.
- Applicability of the decision in the case of Singhal Enterprises Vs. CCE, Raipur on the present case.

Analysis:
The appeal addressed the controversy surrounding the appellant's availing of cenvat credit on structural materials and welding electrodes utilized in the manufacturing plant for sponge iron production. The Department, during an audit, discovered this usage and issued a Show Cause Notice seeking to deny the credit. The original authority confirmed a duty demand of ?10,41,143, a decision upheld in the impugned order, leading to the current appeal.

During the hearing, the appellant's advocate argued that the structural items were used in the factory to manufacture parts of capital goods, primarily as supporting structures. He referenced the Tribunal's decision in Singhal Enterprises Vs. CCE, Raipur, highlighting its relevance to the present case. On the other hand, the Departmental Representative, while supporting the Commissioner (Appeals) findings, acknowledged that the Singhal Enterprises case favored the appellant.

Upon reviewing the records and the Singhal Enterprises case, the Tribunal noted that the earlier decision allowed cenvat credit on structural items used in fabricating support structures for capital goods. The Tribunal cited the user test principle established in previous judgments to determine if goods qualify as capital goods. Applying this test to the current scenario, it was concluded that the structural items used in fabricating support structures were integral to the functioning of capital goods, thus falling within the definition of Capital Goods under Rule 2(a) of the Cenvat Credit Rules.

Consequently, the Tribunal set aside the impugned order and allowed the appeal, citing the clear applicability of the Singhal Enterprises decision to the present case. The issue was deemed no longer res integra, firmly establishing the appellant's entitlement to the cenvat credit in question. The cross objections filed by Revenue were also disposed of in line with the appeal's allowance.