2017 (12) TMI 491 - AT - Central Excise

CENVAT credit - capital goods/input - pre-fabricated steel items used as supporting structure for capital goods - Held that - the issue is addressed by 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. To ascertain, the use of the prefabricated steel items as claimed by the appellant as being used in the factory as supporting structure, accessory of capital goods, the matter is remanded to the adjudicating authority for verification of the same - appeal allowed by way of remand.

Summary

Issues:
Claim of CENVAT credit on pre-fabricated steel items used as supporting structure for capital goods.

Analysis:
The appeal was filed against the order passed by the Commissioner (Appeals), Central Excise, Vapi, confirming the demand for recovery of CENVAT credit of ?17,99,582/- on pre-fabricated steel items used as supporting structure for capital goods, along with interest and penalty. The appellant argued that the items were eligible for credit as per the definition of capital goods/input under Rule 2(a)/2(k) of CCR, 2004, citing a judgment by the Principal Bench at Delhi. The Revenue, however, contended that evidence supporting the use of the items in the factory was lacking, suggesting a remand for verification by the adjudicating authority.

The issue of admissibility of CENVAT credit on structural steel items used as supporting structures for capital goods was addressed by the Principal Bench at Delhi in a previous case. The decision highlighted the interpretation of the term "Input" and discussed the retrospective application of clarificatory amendments. It referenced a judgment by the Hon'ble Gujarat High Court on the retrospective application of an amendment made in 2009. Additionally, the decision referred to a Supreme Court case involving steel plates and MS channels used in the fabrication of a chimney, where the "user test" was applied to determine eligibility for credit. Applying the "user test" to the current case, it was concluded that the structural items used for support structures of capital goods fell within the definition of 'Capital Goods' under Rule 2(a) of the Cenvat Credit Rules, entitling them to the credit.

The Tribunal, while acknowledging the applicability of the "user test" and the eligibility of the structural items for CENVAT credit, remanded the matter to the adjudicating authority for verification of the actual use of the pre-fabricated steel items as claimed by the appellant. Consequently, the impugned order was set aside, and the appeal was allowed by way of remand for further verification.