2017 (10) TMI 836 - AT - Central Excise

CENVAT credit - M/s Channel, Angle, Beam etc. used in fabrication of capital goods within the factory - Held that - reliance placed in 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 , 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. The Appellant should establish the said use by adducing evidences - appeal allowed by way of remand.

Summary

Issues:
1. Eligibility of CENVAT credit on structural steel items used in fabrication of capital goods.
2. Requirement of evidence, including Chartered Engineer's Certificate, to support the claim.

Issue 1: Eligibility of CENVAT credit on structural steel items used in fabrication of capital goods:
The appellant availed CENVAT credit on structural items used in fabricating capital goods within the factory, leading to a demand for recovery. The Ld. Advocate argued that these items qualify as inputs under Rule 2(k) of CCR, 2004, citing a judgment by the Principal Bench at Delhi. The Revenue contended that the claim lacked supporting evidence, suggesting a remand for verification. The Tribunal referred to the judgment in Singhal Enterprises Pvt. Ltd.'s case, emphasizing the user test to determine if the structural items were integral to the capital goods. It was concluded that the structural items used in fabricating support structures for capital goods fell within the ambit of Capital Goods under Rule 2(a) of the Cenvat Credit Rules, entitling the appellant to the credit.

Issue 2: Requirement of evidence, including Chartered Engineer's Certificate, to support the claim:
The Revenue argued that the appellant failed to provide evidence, including a Chartered Engineer's Certificate, to substantiate the use of structural items for fabricating capital goods. The Tribunal agreed that the appellant needed to establish such use through evidence. Consequently, the matter was remanded to the adjudicating authority for a thorough examination of the appellant's claim regarding the eligibility of credit on the structural items. The appellant was granted the opportunity to present additional evidence, including the Chartered Engineer's Certificate, for consideration. The adjudicating authority was directed to decide the issue based on the legal principles established in Singhal Enterprises Pvt. Ltd.'s case.

In conclusion, the judgment by the Appellate Tribunal CESTAT Ahmedabad addressed the eligibility of CENVAT credit on structural steel items used in fabricating capital goods, emphasizing the importance of evidence, including a Chartered Engineer's Certificate, to support such claims. The decision highlighted the application of the user test to determine the integral nature of the structural items in relation to the capital goods, ultimately allowing the appeals by way of remand for further examination and evidence submission.