2017 (8) TMI 258 - AT - Central Excise

CENVAT credit - capital goods - M.S. Channels, M.S. Angles, M.S. Sheets, Plates, Beams, CTD Bars etc. used in the supporting structure of the capital goods - Held that - credit on M.S. Angles, Channels, Beams etc. used in the fabrication of capital goods as well as structure used as support for capital goods, supported by the evidence of Chartered Engineers Certificate, are eligible to CENVAT credit - similar issue decided in the 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:
- Eligibility of CENVAT credit on M.S. Angles, Channels, and Beams used in supporting structures of capital goods.

Analysis:

Issue 1: Eligibility of CENVAT credit on M.S. Angles, Channels, and Beams used in supporting structures of capital goods
The appellant availed CENVAT credit on various items used in supporting structures attached to vertical Enameling Oven. A notice was issued for recovery of credit, and after adjudication, the demand was confirmed with interest and penalty. The Ld. Advocate for the appellant argued that the items were used for supporting structures of capital goods, making them eligible for credit as per the definition of 'input service.' Reference was made to judgments by the Supreme Court and High Courts to support the contention that credit is admissible for such structures. The Revenue, however, supported the findings of the Adjudicating Authority, citing a judgment of the Bombay High Court to assert that credit on such items cannot be considered admissible.

The Tribunal analyzed the issue and referred to a decision by the Principal Bench at Delhi in a similar case. The Tribunal discussed the 'user test' established by the Supreme Court to determine if goods qualify as capital goods. Applying this test, it was concluded that structural items used in the fabrication of support structures for capital goods fall within the ambit of 'Capital Goods' as per the Cenvat Credit Rules. The Tribunal highlighted that the structural items were essential for the smooth functioning of various capital goods and, therefore, should be considered as parts of the relevant machines. Consequently, the Tribunal held that M.S. Angles, Channels, Beams, etc., used in the fabrication of capital goods and supporting structures are eligible for CENVAT credit. The impugned order was set aside, and both appeals were allowed with consequential relief, if any, as per law.

This judgment clarifies the eligibility of CENVAT credit on structural items used in supporting structures of capital goods, emphasizing the importance of the 'user test' in determining such eligibility. The decision provides a comprehensive analysis of relevant legal precedents and rules to support the conclusion reached by the Tribunal.