2017 (9) TMI 145 - AT - Central Excise

CENVAT credit - capital goods - TMT Bars, Angles, Channel, HR Coils, CTD Bar and other items used in fabrication of structures for support of Capital goods - Held that - issue is covered by the decision in the case of Singhal Enterprises Pvt. Ltd Vs CCE&C, 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 - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand for recovery of Cenvat credit on certain items used in fabrication of support structures for capital goods.

Analysis:
The appellant, engaged in manufacturing fabrics, wrongly availed Cenvat credit on various items used in fabrication of support structures for capital goods. The demand for recovery of credit, along with interest and penalty, was confirmed by the Commissioner of Central Excise. The appellant's appeals were rejected by the Ld. Commissioner (Appeals), leading to the present appeals before the Tribunal.

The appellant argued that the structural items were essential for fabricating support structures for capital goods like storage tanks and stairs, citing a Tribunal decision. The Revenue, represented by the Ld. AR, supported the findings of the Ld. Commissioner (Appeals). The Tribunal referred to a decision by the Principal Bench at Delhi, which discussed the admissibility of credit on structural steel items used in fabricating support structures for capital goods.

The Tribunal highlighted the decision of the Larger Bench in Vandana Global Ltd.'s case, which stated that even if iron and articles were used as support structures, they would not be eligible for credit. However, the Tribunal noted that the amendment to the definition of "Input" was not clarificatory and should be applied prospectively. Referring to a decision by the Hon'ble Gujarat High Court, the Tribunal emphasized the "user test" established by the Apex Court to determine whether goods could be considered capital goods.

Applying the "user test" to the case at hand, the Tribunal concluded that the structural items used in fabricating support structures for capital goods fell within the ambit of "Capital Goods" as per the Cenvat Credit Rules. Therefore, credit on items like M.S. Angles, Channels, Beams, TMT Bars, CTD Bars, and H.R. Sheets used for fabrication of capital goods and support structures was deemed eligible for CENVAT credit. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief as per the law.