2017 (9) TMI 989 - AT - Central Excise

CENVAT credit - M.S.Channels, M.S.Angles/Joists/Beams, Welding Electrodes etc. - Held that - relying the decision in the case of Singhal Enterprises Pvt. Ltd. Vs. Commr. of 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, the credit is allowed. Penalty - Held that - the same is on interpretation of law, hence not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against Order-in-Appeal disallowing cenvat credit on certain items.
- Interpretation of law regarding the eligibility of certain items for cenvat credit.
- Consideration of precedents and judgments related to similar issues.
- Penalty imposition based on interpretation of law.

Analysis:
1. The appeal was filed against the Order-in-Appeal disallowing cenvat credit on items like M.S. Channels, M.S. Angles/Joists/Beams, Welding Electrodes used in the manufacture of writing and printing paper. The period of dispute was from April 2003 to April 2008.
2. The Tribunal considered past cases such as Singhal Enterprises Pvt. Ltd., Lafarge India Ltd., Maihar Cement, and Hindustan Zinc, where the issue of cenvat credit eligibility on similar items was discussed. Reference was made to the decision of the Apex Court in the case of CCE, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd., emphasizing the user test to determine if goods could be considered capital goods.
3. The Tribunal noted the decision of the Hon'ble Allahabad High Court in Commr. of Central Excise, Ghaziabad Vs. Samtel Colour Ltd., where cenvat credit on paints and building materials was allowed. Similarly, in Commr. of Central Excise, Coimbatore Vs. Jawahar Mills Ltd., cenvat credit on power cables, capacitors, and control panels was permitted for high voltage electricity transfer.
4. Regarding penalty imposition, it was observed that since the major demand for cenvat credit was allowed based on interpretation of law, the penalty was deemed unsustainable. Thus, the penalty was canceled, and the impugned order was set aside.
5. Consequently, the appeals filed by the appellants were allowed, granting them relief in the matter of cenvat credit disallowance and penalty cancellation. The decision was dictated and pronounced in the open court by Justice (Dr.) Satish Chandra.