2017 (8) TMI 547 - AT - Central Excise

CENVAT credit - steel items used for fabrication and installation of air pollution equipment in the manufacturing facility - Held that - the appellant is entitled to Cenvat credit for the subject steel items used for fabrication and installation of air pollution equipment at their manufacturing premises - reliance placed in the case of Commissioner Of Central Excise, Jaipur Versus M/s Rajasthan Spinning & Weaving Mills Ltd. 2010 (7) TMI 12 - SUPREME COURT OF INDIA , where it was held that the assessee was entitled to avail of modvat credit in respect of the subject items viz. steel plates and M.S. channels used in the fabrication of chimney for the diesel generating set, by treating these items as capital goods in terms of Rule 57Q of the Rules - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against denial of Cenvat credit on steel items used for fabrication and installation of air pollution equipment.

Analysis:
The appellant, M/s Tirumala Balaji Alloys Pvt. Ltd., appealed against the denial of Cenvat credit on steel items used for fabricating and installing air pollution equipment at their manufacturing facility. The issue was whether these steel items could be considered as capital goods and thus eligible for Cenvat credit. The matter was found to be covered by the Hon'ble Supreme Court's decision in the case of CCE, Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd. The Supreme Court had previously ruled that items like steel plates and M.S. channels used in the fabrication of specific equipment could be treated as capital goods and were entitled to Modvat credit under the relevant rules. The "user test" was applied to determine if the steel plates and M.S. channels used in fabricating the chimney for the diesel generating set could be classified as capital goods. It was established that these items fell within the definition of capital goods as per Rule 57Q, considering their essential role in complying with Pollution Control laws. Therefore, the Tribunal correctly held that the appellant was entitled to avail of Cenvat credit for the steel items in question.

The Tribunal, in light of the Supreme Court's decision and the "user test" application, concluded that the appellant was indeed entitled to Cenvat credit for the steel items used in fabricating and installing air pollution equipment at their manufacturing premises. As a result, the impugned order denying the credit was set aside, and the appeal was allowed with any consequential benefits to the appellant. The judgment emphasized the importance of considering the specific use and necessity of items in determining their classification as capital goods for availing of Cenvat credit.