2017 (10) TMI 270 - AT - Central Excise

CENVAT credit - M.S. Angles, H.R. Plate & H.R. Coil, used in the fabrication of structures for support of the Capital goods installed within the factory premises - Held that - the Principal Bench at Delhi in Singhal Enterprises Pvt. Ltd s case 2016 (9) TMI 682 - CESTAT NEW DELHI has 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. The Appellant should establish the said use by adducing evidences. In the result, the matter is remanded to the adjudicating authority to examine the claim of the appellant on the eligibility of credit on the aforesaid items - appeal allowed by way of remand.

Summary

Issues:
- Eligibility of CENVAT credit on duty materials used in fabrication of structures for support of capital goods
- Requirement of Chartered Engineer's Certificate as evidence
- Interpretation of relevant legal principles and precedents

Analysis:
1. Eligibility of CENVAT credit: The appellant availed CENVAT credit on duty materials used in fabricating structures for supporting capital goods within the factory premises. The issue arose when a Show Cause Notice was issued to recover the credit amount. The appellant argued that the items were eligible for credit as they were used as structures for holding capital goods. The Ld. Advocate cited a Tribunal judgment supporting the admissibility of credit on similar items used for the same purpose. However, the Revenue argued against the claim, stating lack of evidence, including the absence of a Chartered Engineer's Certificate to support the use of the items.

2. Requirement of Chartered Engineer's Certificate: The absence of a Chartered Engineer's Certificate became a crucial point in the case. While the appellant acknowledged this deficiency, the Revenue emphasized the need for such evidence to substantiate the claim for CENVAT credit. This requirement was considered essential for verifying the actual use of the duty materials in fabricating structures for supporting capital goods, as per the legal provisions and precedents.

3. Interpretation of legal principles: The judgment referred to a previous 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 analyzed various legal precedents and the concept of "user test" to determine whether the items in question could be considered as parts of relevant machines. The judgment highlighted the importance of supporting evidence and the application of legal principles to establish the eligibility of CENVAT credit on duty materials used for specific purposes within the manufacturing process.

4. Conclusion: The Tribunal, after considering the arguments presented by both parties, remanded the matter to the adjudicating authority for further examination. The appellant was directed to provide evidence, including a Chartered Engineer's Certificate, to support their claim for CENVAT credit. The decision was made in alignment with the legal principles and precedents discussed in the judgment, ensuring a comprehensive review of the issue before reaching a final decision.