2017 (12) TMI 504 - AT - Central Excise

CENVAT credit - raw materials used in the manufacture of Pig Iron, Sponge Iron and Steel Billets - Held that - the issue is squarely covered by the decision of the Tribunal in the case of Singhal Enterprises Pvt. Ltd. vs Commissioner of 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 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against Order-in-Original denying cenvat credit for raw materials used in manufacturing Pig Iron, Sponge Iron, and Steel Billets from February 2006 to March 2008.

Analysis:
The appellant filed an appeal against the denial of cenvat credit by the department for raw materials used in manufacturing Pig Iron, Sponge Iron, and Steel Billets from February 2006 to March 2008. The issue was whether the appellant was entitled to claim cenvat credit on welding electrodes and various structural steel items used in the fabrication of support structures for capital goods. The Tribunal referred to the decision in the case of Singhal Enterprises Pvt. Ltd. vs Commissioner of Customs & Central Excise, Raipur, where the credit on welding electrodes was allowed as inputs. The Tribunal also considered the decision in Vandana Global Ltd. case, which held that iron and articles used as supporting structures were not eligible for credit. However, the Tribunal found that the amendment made on 7-7-2009 regarding the definition of input was not clarificatory and should be applied prospectively.

The Tribunal further referenced the decision of the Hon'ble Gujarat High Court in the case of Mundra Ports & Special Economic Zone Ltd., where it was observed that the amendment made on 7-7-2009 was not clarificatory. The Tribunal also cited the Supreme Court's decision in CCE, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd., where the user test was applied to determine whether certain goods could be considered capital goods. Applying the user test, the Tribunal found 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. The structural items were considered parts of the relevant machines, and therefore, entitled to cenvat credit.

Based on the Tribunal's analysis and following the precedent set by previous decisions, the impugned order denying cenvat credit was set aside, and the appeal filed by the appellant was allowed. The Tribunal's decision was dictated and pronounced in the Open Court.