2017 (3) TMI 1130 - AT - Central Excise

CENVAT credit - steel items namely angle, channel, beam, plate, flat, joists, HR steel etc. - denial on the ground that on the ground that the goods have been used for erection of plant fixed to earth, which cannot be considered as goods - Held that - Since, the disputed goods were used for manufacture/erection of the capital goods within the factory, the same should be considered as input for the purpose of taking Cenvat credit and immovability of the goods should not be a criteria for denial of Cenvat credit - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of Cenvat credit on steel items used for erection of plant fixed to earth.

Analysis:
The appeal challenged the order denying Cenvat credit on steel items like angle, channel, beam, plate, flat, joists, HR steel used for manufacturing machinery, equipment, and accessories. The appellant argued that the disputed goods were essential for the appellant's operations and provided a Chartered Engineer certificate to support their claim. The Adjudicating Authority rejected the credit, stating the goods were used for plant erection, not eligible for Cenvat credit. However, the Tribunal noted that the definition of input under Cenvat Credit Rules, 2004 is broad and includes goods used in manufacturing final products or capital goods. The Chartered Engineer certificate detailed steel consumption for machinery fabrication, supporting the appellant's claim. The Tribunal emphasized that immovability of goods should not bar Cenvat credit eligibility, citing precedents like SLR Steels Ltd. and The India Cements Ltd. The Tribunal referenced the decision in Singhal Enterprises Pvt. Ltd., aligning with the Apex Court's "user test" to determine capital goods eligibility, ultimately allowing the appeal.

The Tribunal scrutinized the Adjudicating Authority's denial of Cenvat credit on steel items, emphasizing the broad definition of input under the Cenvat Credit Rules, 2004. The Chartered Engineer certificate provided by the appellant was deemed credible evidence of steel usage for machinery fabrication, supporting their eligibility for Cenvat credit. The Tribunal rejected the notion that goods used for plant erection are ineligible, citing relevant case law like SLR Steels Ltd. and The India Cements Ltd. The Tribunal's decision in Singhal Enterprises Pvt. Ltd. further solidified the appellant's entitlement to Cenvat credit, aligning with the Apex Court's "user test" to establish capital goods eligibility based on the purpose and usage of the steel items in question.

The Tribunal's analysis focused on the Adjudicating Authority's denial of Cenvat credit for steel items used in plant erection, contrasting it with the broad definition of input under the Cenvat Credit Rules, 2004. By considering the Chartered Engineer certificate and relevant case law, the Tribunal upheld the appellant's claim for Cenvat credit, emphasizing the importance of steel items in machinery fabrication. The Tribunal's decision in Singhal Enterprises Pvt. Ltd. and reference to the Apex Court's "user test" highlighted the critical role of steel items in supporting machinery and established their classification as capital goods, warranting Cenvat credit eligibility. Ultimately, the Tribunal ruled in favor of the appellant, overturning the Adjudicating Authority's denial of Cenvat credit on the disputed steel items.