2017 (11) TMI 762 - AT - Central Excise

CENVAT credit - Round Bars/ H.R. Plates/ M.S. Channels / M.S. Angles/ Parallet Falnge Coloumns/ Non Alloys Steel etc.used in fabrication and supporting structure of the capital goods within the factory - Held that - the Principal Bench at Delhi in Singhal Enterprises Pvt. Ltd s 2016 (9) TMI 682 - CESTAT NEW DELHI in laying down the principle on the eligibility of credit on similar items in its use as structural support to capital goods 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 - appeal allowed by way of remand.

Summary

Issues:
- Eligibility of CENVAT credit on specific items used in fabrication and supporting structure of capital goods.
- Requirement of Chartered Engineer's Certificate as evidence for claiming credit.
- Interpretation of the definition of input under Rule 2(k) of CCR, 2004.
- Comparison of relevant legal precedents to determine credit eligibility.
- Necessity of establishing use through evidence for credit entitlement.

Analysis:

The appeal addressed concerns regarding the eligibility of CENVAT credit on items like Round Bars, H.R. Plates, M.S. Channels, and others used in the fabrication and supporting structure of capital goods within the factory. The appellant claimed credit based on the definition of input under Rule 2(k) of CCR, 2004, arguing that the items were essential for the mentioned purposes. However, the absence of a Chartered Engineer's Certificate to support this claim was noted.

The legal representative for the appellant referenced a judgment by the Principal Bench at Delhi in a similar case, emphasizing the admissibility of credit for structural support to capital goods. Conversely, the Revenue's representative contended that the lack of evidence, including the Chartered Engineer's Certificate, undermined the appellant's claim. The Tribunal reviewed the precedent set by the Principal Bench in Singhal Enterprises Pvt. Ltd.'s case, which clarified the eligibility of credit on structural steel items used in supporting capital goods.

The Tribunal highlighted the User Test principle established by the Apex Court in previous cases to determine whether goods qualify as capital goods. Applying this test, it was concluded that the structural items used in the fabrication of support structures for capital goods fell within the ambit of Capital Goods as defined under Rule 2(a) of the Cenvat Credit Rules. However, it was also acknowledged that the appellant needed to provide evidence to establish the use of these items for credit entitlement. Consequently, the matter was remanded to the adjudicating authority for further examination, allowing the appellant to present additional evidence, including the required Chartered Engineer's Certificate, to support their claim.

In conclusion, the appeal was allowed by way of remand, with the adjudicating authority directed to decide on the credit eligibility based on the principles established in the referenced legal precedents, particularly the User Test, and the necessity of providing adequate evidence to substantiate the claim.