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2016 (12) TMI 590 - AT - Central ExciseCENVAT credit - manufacture of sponge iron - M.S. Angles, Channels, Plates, CTD Bars, Joists, Beams, Welding Electrodes, etc - The period involved is November, 2004 to March, 2009 - Held that - We find that the question of eligibility of various steel items for cenvat credit in such situation has been a subject matter of decision by the Tribunal, various High Courts and the Supreme Court. We find that there are a larger number of decisions holding that M.S. Angles, Channels, Plates, etc. used in fabrication of structures are eligible for credit as long as they are shown to have been used in Connection with any of the capital goods inside the factory. Though these M.S. Plates and Angles fall under Genera Statutory Items Chapter 72 or 73 of the Central Excise Tariff Act, the purpose of their end use determines their eligibility. The Hon ble Supreme Court in Rajasthan Spg. & Wvg. Mills Ltd. 2010 (7) TMI 12 - SUPREME COURT OF INDIA allowed the credit on steel plates and M.S. Angles, channels used in the fabrication of chimney for diesel generating sets. CENVAT credit allowed - appeal allowed - decided in favor of assessee.
Issues:
- Eligibility for cenvat credit on structural items like M.S. Angles, Channels, Plates, etc. - Interpretation of the term 'Capital Goods' under Cenvat Credit Rules. - Application of the 'user test' to determine eligibility for credit. - Comparison of various judicial decisions on similar issues. Analysis: Eligibility for Cenvat Credit on Structural Items: The case involved a dispute regarding the eligibility of cenvat credit on various structural items like M.S. Angles, Channels, Plates, CTD Bars, Joists, Beams, Welding Electrodes used in the fabrication of structures. The Original Authority disallowed the credit on the ground that these items were used in manufacturing immovable structures attached to the earth. However, the appellant argued that these items were used in the manufacture of supporting structures for capital goods inside the factory premises. The appellant provided technical details and a certificate from a Chartered Engineer to support their claim. The Tribunal noted that similar issues had been addressed in previous decisions by higher courts and held that the steel items were eligible for credit if shown to be used in connection with capital goods inside the factory. Interpretation of 'Capital Goods' under Cenvat Credit Rules: The Tribunal examined the definition of 'Capital Goods' under the Cenvat Credit Rules and emphasized that the purpose of the end use of items like M.S. Angles, Channels, and Plates determined their eligibility for credit. The Tribunal referred to the 'user test' established by the Supreme Court in previous cases to determine whether the structural items qualified as capital goods. It was highlighted that these items, when used in the fabrication of support structures for capital goods like kilns and conveyors, should be considered parts of the relevant machines and hence eligible for cenvat credit. Application of the 'User Test' to Determine Eligibility: The Tribunal applied the 'user test' to the case at hand and concluded that the structural items were essential components for supporting various capital goods within the factory. The appellant's argument that capital goods like kilns and conveyors needed suitable support for smooth functioning was accepted. By satisfying the 'user test' and considering the fabricated goods as parts of the relevant machines, the Tribunal held that the structural items fell within the definition of 'Capital Goods' under the Cenvat Credit Rules, entitling them to cenvat credit. Comparison of Judicial Decisions: The Tribunal referenced various judicial decisions, including a recent case, to support its ruling. It highlighted the Supreme Court's decision in Rajasthan Spg. & Wvg. Mills Ltd., which allowed credit on steel plates and M.S. Angles used in fabricating structures. The Tribunal also mentioned decisions by High Courts, such as the Madras High Court, which supported the availability of cenvat credit on structural items used in construction and erection of various structures. By aligning with previous judgments and adopting the principles established by higher courts, the Tribunal set aside the original order and allowed the appeal. In conclusion, the Tribunal's detailed analysis and application of legal principles from previous decisions led to the allowance of cenvat credit on the disputed structural items, emphasizing the importance of the 'user test' and the end use of such items in connection with capital goods within the factory premises.
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