2017 (7) TMI 938 - AT - Central Excise

CENVAT credit - various steel items, such as, angles, channels, beam, joists, flats, plates etc. which was for the support structures on which various capital goods - Held that - the identical issue has been put up before the Tribunal in the case of Singhal Enterprises Pvt. Ltd. Vs. CCE, 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 assessee.

Summary

Issues:
Claim of Cenvat credit on structural steel items used in the fabrication of support structures for capital goods.

Analysis:
The appellants, engaged in the manufacture of sponge iron, claimed Cenvat credit on various steel items used for support structures on which capital goods were placed, but the lower authority denied the claim. The Tribunal referred to a similar case where credit was denied based on a Larger Bench decision, emphasizing an amendment to the definition of "Input" from 7-7-2009. The Tribunal noted conflicting views on the retrospective application of the amendment but relied on a decision by the Hon'ble Gujarat High Court regarding its prospective application. The Tribunal further cited a Supreme Court decision involving steel plates and MS channels used in the fabrication of a chimney, where the "user test" was applied to determine eligibility for credit. Applying the "user test" to the case at hand, the Tribunal found that the structural steel items were essential for supporting capital goods, making them eligible for Cenvat credit under the definition of "Capital Goods" in Rule 2(a) of the Cenvat Credit Rules.

In a subsequent case, the Tribunal allowed Cenvat credit on similar items following the above decision. Based on the precedent set by earlier orders, the Tribunal set aside the impugned order and allowed the appeal of the assessee, granting them the Cenvat credit on the structural steel items used in the fabrication of support structures for capital goods.

This detailed analysis of the judgment highlights the key legal arguments, precedents, and reasoning behind the decision to allow the Cenvat credit on the disputed structural steel items.