2017 (10) TMI 269 - AT - Central Excise

CENVAT credit - Plate, Pipes, Beam, etc. used for fabrication of supporting structure to various capital goods within the factory - Held that - the issue is covered by the judgment of the Principal Bench at Delhi in the case of Singhal Enterprises Pvt. Ltd. Vs. Commissioner of Central Excise & Customs, 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 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against order-in-appeal confirming demand of CENVAT credit on certain items used for fabrication of supporting structures for capital goods.

Analysis:
The appellant availed CENVAT credit on items like Plate, Pipes, Beam, etc., used for fabrication of supporting structures for capital goods within the factory. A Show Cause Notice was issued for recovery of credit availed on these items. The demand was confirmed along with interest and penalty. The Ld. Commissioner (Appeals) upheld the order of the Adjudicating Authority, leading to the present appeal.

Upon review, it was found that the items were indeed used in the fabrication of capital goods' structures. The judgment of the Principal Bench at Delhi in a similar case was cited, which discussed the admissibility of credit on structural steel items used for support structures. The judgment highlighted the application of the "user test" to determine if the items could be considered as capital goods. It was argued that the structural items used for support structures were essential for the smooth functioning of various capital goods like kilns, conveyors, and furnaces. Therefore, these items were considered parts of the relevant machines, falling within the definition of 'Capital Goods' under Rule 2(a) of the Cenvat Credit Rules.

Based on the above analysis and the precedent set by the judgment, the impugned order was set aside, and the appeal was allowed with consequential relief as per law. The decision emphasized the importance of the "user test" in determining the eligibility of items for CENVAT credit, especially when used in the fabrication of support structures for capital goods.