2017 (10) TMI 797 - AT - Central Excise

CENVAT credit - M/s Channel, Angle, TMT Bars etc. used in erection of capital goods, supporting structures within the factory - Held that - the decision in the case of M/s. Singhal Enterprises Private Limited Versus The Commissioner Customs & Central Excise, Raipur 2016 (9) TMI 682 - CESTAT NEW DELHI 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 - appeal allowed by way of remand.

Summary

Issues:
- Eligibility of CENVAT credit on structural steel items used in the erection of capital goods within the factory.

Analysis:
The appeal was filed against an order-in-appeal dated 01.08.2014 passed by the Commissioner (Appeals) Vapi, where a demand for recovery of &8377;30,98,379/- was made on the appellant for availing CENVAT credit on items like M/s Channel, Angle, TMT Bars used in the erection of capital goods within the factory. The appellant contended that these items were eligible for credit as they were used for the fabrication of capital goods, citing the judgment of the Principal Bench at Delhi in Singhal Enterprises Pvt. Ltd. Vs. C.Cus. & C. Ex., Raipur. However, the appellant failed to provide a Chartered Engineer's Certificate to support their claim.

The Revenue argued that the appellant's claim lacked evidence, including the absence of a Chartered Engineer's Certificate, and requested the matter to be remanded for verification. The Tribunal referred to the judgment in Singhal Enterprises Pvt. Ltd.'s case, where it was established that structural items used in the fabrication of support structures for capital goods fall within the ambit of Capital Goods under Rule 2(a) of the Cenvat Credit Rules. The Tribunal emphasized the "user test" to determine the eligibility of goods as capital goods, highlighting that the structural items were necessary for the functioning of various capital goods within the factory.

The Tribunal agreed with the Revenue's contention that the appellant needed to provide evidence to establish the use of the items, including a certificate from a Chartered Engineer. Consequently, the matter was remanded to the adjudicating authority for further examination based on the principles established in Singhal Enterprises Pvt. Ltd.'s case. The appellant was given the opportunity to present additional evidence, and the adjudicating authority was directed to make a decision considering the legal principles discussed. The appeal was allowed by way of remand, keeping all issues open for further consideration.