2017 (6) TMI 367 - AT - Central Excise

CENVAT credit - components of boiler under CETH 8402 - The original authority held that the steel structural items fabricated by M/s. Thyssenkrupp Industries India Pvt. Ltd. at site cannot be called as parts of boilers and they are more appropriately classifiable as Columns/ beams, channels under Chapter 73 of the Central Excise Tariff Act, 1985, and credit was denied - Held that - The Tribunal in the case of M/s. Monnet Ispat Ltd. & M/s. Cether Vessels Pvt. Ltd. Versus C.C.E. & S.T. Raipur 2017 (3) TMI 544 - CESTAT NEW DELHI elaborately examined the issue and held that the denial of credit is not justified. In fact, the Tribunal held that even goods such as angles, channels, sections etc. which are classifiable under Chapter 73 and are used for fabrication in the factory for manufacture of support structures which ultimately become part of the boiler would also be eligible for cenvat credit. The Circular dated 18.05.2012 reiterates the Circular dated 02.04.2012 and further clarifies that whether certain structural components were to be treated as boiler parts or as goods for making structures to support the boilers is a question of fact, which requires examination, on a case to case basis. The clarification is to the effect that structural components used for laying foundation or for support of capital goods is not available. We find that when the classification is held to be under Chapter 84, the description of a product being support or a part loses relevance. The re-classification and consequent denial of CENVAT credit on the disputed items are not legally sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of cenvat credit on items fabricated at site for supporting structures of boilers
- Classification of fabricated steel items under Central Excise Tariff Act, 1985
- Interpretation of Cenvat Credit Rules, 2004 regarding eligibility for credit
- Application of relevant case laws and judicial precedents

Analysis:

The judgment revolves around two appeals challenging an order by the Commissioner of Central Excise, Raipur, regarding the denial of cenvat credit on items fabricated at the site for supporting structures of boilers. The dispute arises from the classification of these items under the Central Excise Tariff Act, 1985, and the interpretation of the Cenvat Credit Rules, 2004, concerning the eligibility for credit. The original authority held that the fabricated steel items are not parts of boilers but support structures, thus ineligible for credit. The appellants argued that the items were specifically intended for use in the boiler and relied on various decisions to support their classification and entitlement to cenvat credit.

The Revenue contended that the denial of credit is justified as the fabricated items were support structures, not eligible for credit under the clear statutory provision. They emphasized that the denial was only for support structures and not identified parts of boilers. The Tribunal noted that the denial of credit was not justified, especially considering similar disputes in other cases where credit was allowed for items used in the manufacture of support structures becoming part of boilers upon erection. The Tribunal cited relevant case laws, including a Supreme Court decision, to support the classification of fabricated steel structures as parts of boilers under the Central Excise Tariff Act, 1985.

The Tribunal highlighted that the Circulars issued by the Board clarified that structural components used for laying foundation or supporting capital goods are not eligible, but items under Chapter 73 used in manufacturing supporting structures are eligible for cenvat credit. Relying on the legal position established in previous orders, the Tribunal found the re-classification and denial of cenvat credit on the disputed items legally unsustainable. Consequently, the impugned order was set aside, and the appeals were allowed.

In conclusion, the judgment addresses the complex issues of classification, eligibility for cenvat credit, and the interpretation of relevant legal provisions and case laws. It clarifies the treatment of fabricated steel items for supporting structures of boilers under the Central Excise Tariff Act, 1985, and provides a comprehensive analysis based on judicial precedents and statutory regulations.