2017 (1) TMI 920 - AT - Central Excise

CENVAT credit - denial on the ground that the steel items in question have been used for fabrication/manufacture and erection of supporting structure for capital goods, which are ultimately fixed/embedded to the earth, and hence are not goods, as it becomes an immovable property - Held that - reliance placed in thee 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 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Cenvat credit eligibility on steel items used for fabrication of supporting structure for capital goods.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi challenged the order passed by the Commissioner (Appeals), Jaipur regarding the denial of Cenvat credit to the appellant for certain steel items used in the manufacture of TMT bars. The appellant considered these steel items as inputs for fabrication and installation of a Cooling bend and for repair and maintenance of plant and machinery. The department contended that the steel items were used for fabrication of supporting structures for capital goods, which were considered immovable property, thus not qualifying as inputs or capital goods under the Cenvat Credit Rules, 2004. The lower authorities supported this view based on a Larger Bench decision of the Tribunal in Vandana Global Ltd. case. The appellant challenged this denial of Cenvat credit through the present appeal.

During the hearing, the appellant's advocate cited several case laws, including Topworth Steels and Power Pvt. Ltd., Singhal Enterprises Pvt. Ltd., Lafarge India Pvt. Ltd., and Dalmia Bharat Sugar & Industries Ltd., in support of their argument. On the other hand, the Departmental Representative (DR) relied on a contrary judgment of the Allahabad High Court in the case of Daya Sugar Vs. CCE, Meerut-I. After considering the arguments from both sides, the Member (Technical) found that the issue had been consistently decided in favor of the appellants in previous decisions.

The Member noted that the issue had been settled in favor of the assessee by a majority of High Courts and the Supreme Court, particularly referring to the Jawahar Mills case. Consequently, the Member followed the decisions of the coordinate bench and ruled in favor of the appellants. As a result, the impugned order denying the Cenvat credit on the steel items was set aside, and the appeal was allowed.