2017 (9) TMI 143 - AT - Central Excise

CENVAT credit - capital goods/inputs - HR Coils, CR/SS Sheets, MS Channel/Angles etc., which were used in the fabrication of Capital Goods - Held that - the issue is covered by the decision of Principal Bench at Delhi in Singhal Enterprises Ltd case 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 - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
- Admissibility of Cenvat credit on HR Coils, CR/SS Sheets, MS Channel/Angles used in fabrication of capital goods

Analysis:
The appeal was filed by the Revenue against an order passed by the Commissioner of Central Excise, Customs and Service Tax (Appeals) -SURAT-I, where it was observed that M/s Shree Chaltan Vibhagh Khand Udyog Sahakari Mandali wrongly availed Cenvat credit on certain items used in the fabrication of capital goods. The Revenue contended that the credit on angles, channels, beams, etc., was inadmissible. The key issue was whether the appellants were eligible for Cenvat credit on these items. The decision referred to the case of Singhal Enterprises Ltd, where it was discussed whether credit was admissible on structural steel items used in the fabrication of support structures for capital goods. The decision highlighted the importance of the "user test" to determine if the goods could be considered as capital goods. It was concluded that the structural items used in the fabrication of support structures fell within the ambit of "Capital Goods" as defined under Rule 2(a) of the Cenvat Credit Rules, making them eligible for Cenvat credit.

The decision further discussed the retrospective application of amendments and referred to the case of Mundra Ports & Special Economic Zone Ltd. The Tribunal emphasized the application of the "user test" in determining the eligibility of items for Cenvat credit, citing the case of CCE, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd. The judgment highlighted that the structural items were essential for supporting various capital goods like kilns, conveyors, and furnaces, ensuring their smooth functioning. Consequently, the Tribunal upheld the impugned order, dismissing the Revenue's appeal and allowing the appellants to avail Cenvat credit on the items used in the fabrication of capital goods.