2017 (8) TMI 782 - AT - Central Excise

CENVAT credit - Channels, Plates, TMT bars etc. - inputs - capital goods - Rule 2 (k) and Rule 2 (a) (A) of Cenvat Credit of Rules, 2004 - Held that - the matter is covered by Tribunal s decisions in cases of CC & CCE., Vishakhapatnam-II V/s APP Mills Ltd. 2013 (7) TMI 494 - CESTAT BANGALORE and Simbhaoli Sugars Ltd. Vs CCE, Meerut-II 2016 (3) TMI 615 - CESTAT ALLAHABAD , whereunder Cenvat credit for subject items has been allowed to the assessee - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Entitlement to Cenvat Credit on items like Channels, Plates, TMT bars, etc. under Rule 2 (k) and Rule 2 (a) (A) of Cenvat Credit Rules, 2004 for the period December 2006 to March 2009.

Comprehensive Analysis:

Issue 1: Entitlement to Cenvat Credit on specified items
The appellant contested the denial of Cenvat credit on Channels, Plates, TMT bars, etc. The Tribunal referred to previous decisions where Cenvat credit for similar items was allowed. The Tribunal compared Rule 57Q with Rule 2(a) of CCR, 2004 to determine the eligibility of these items as capital goods. The Tribunal applied the "user test" to establish that the structural support for machinery, including MS angles, plates, etc., qualifies as capital goods under Rule 2(a)(A). The Tribunal relied on the Supreme Court's ruling in a similar case to support this conclusion. It was held that the items used for fabricating structural support for machinery are integral parts of the machinery and thus qualify as capital goods for Cenvat credit.

Issue 2: Precedent and Tribunal's Decision
The Tribunal highlighted the inconsistency between its previous Larger Bench decision and the subsequent Supreme Court ruling. The Larger Bench had previously held that supporting structures for machinery are not considered part or accessories of the machinery, hence not qualifying as capital goods for Cenvat credit. However, the Tribunal noted that this view was no longer valid post the Supreme Court's decision. By following the Supreme Court's interpretation and previous Tribunal decisions, the impugned order was set aside, and the appeal was allowed with consequential relief for the appellant.

In conclusion, the Tribunal's detailed analysis of the entitlement to Cenvat credit on specific items under the relevant rules, along with the application of legal precedents and the "user test," resulted in the decision to allow the appeal and grant relief to the appellant. The judgment emphasized the importance of aligning interpretations with higher court rulings and maintaining consistency in legal decisions.