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2017 (2) TMI 532 - AT - Central ExciseCenvat credit - M.S. Steel items used in the fabrication of structures, cable tray, angles, etc - Rule 2(a) of Cenvat Credit Rules, 2004 - Held that - Mere assertion of legal definition without supporting fact cannot be sustained to deny the credit. The decided cases, as mentioned above, are in support of the appellant s plea for credit. Further, as held by the Hon ble Supreme Court in the case of Rajasthan Spg. & Wvg. Mills Ltd. 2010 (7) TMI 12 - SUPREME COURT OF INDIA the nature of usage of items on which the credit has been availed has to be examined in the factual context to determine their eligibility or otherwise. Applying such user test , the appellant s eligibility for credit cannot be denied in the facts as recorded by the Lower Authorities - Appeal allowed.
Issues:
- Denial of Cenvat credit for M.S. Steel items used in fabrication - Classification of items as "capital goods" - Application of "user test" for determining eligibility of items - Interpretation of legal definitions for credit eligibility Issue 1: Denial of Cenvat credit for M.S. Steel items used in fabrication The appellant was denied Cenvat credit of &8377; 1,88,121/- for various M.S. Steel items used in fabricating structures, cable trays, angles, etc. The denial was based on the argument that these items were used for fabricating support structures, which were specifically excluded from the category of "capital goods" under Rule 2(a) of the Cenvat Credit Rules, 2004. Issue 2: Classification of items as "capital goods" The appellant argued that the steel items were used in fabricating Indigo Dying Machine and Cable Tray for a Thermal Power Plant, which should be considered as "capital goods" as they are directly used in the fabrication of plant and machinery or essential accessories. Reference was made to previous tribunal decisions and legal principles to support the claim that cable trays used in plant and machinery are eligible for Cenvat credit. The appellant emphasized the application of the "user test" as explained by the Supreme Court to determine the eligibility of items for credit. Issue 3: Application of "user test" for determining eligibility of items The Tribunal examined the appellant's assertion that the M.S. items were used in the fabrication of specific machinery and equipment in their factory premises. It was noted that the lower authorities had not provided a sufficient justification for denying the credit based solely on the classification of the items as support structures. The Tribunal emphasized the need to consider the actual usage of the items to determine their eligibility for credit, as per the legal precedents cited by the appellant. Issue 4: Interpretation of legal definitions for credit eligibility The Tribunal concluded that the denial of Cenvat credit based on the classification of the items as support structures was not justified. The appellant's claim for credit was supported by legal precedents and the application of the "user test" to determine the eligibility of items for credit. The Tribunal set aside the impugned order and allowed the appeal, highlighting the importance of examining the factual context of item usage to establish eligibility for credit.
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