2017 (12) TMI 550 - AT - Central Excise

CENVAT credit - input - materials for making structurals, platforms etc. to support the machinery etc. in the factory - Held that - cenvat credit on the cement and TMT bar in lying foundation is applicable as per the ratio laid down by the Tribunal in the case of Lafarge India Pvt. Ltd. vs. CCE, 2016 (10) TMI 615 - CESTAT NEW DELHI where cenvat credit was allowed on the cement which were used for the capital goods. Regarding structural items, cenvat credit is applicable as per the ratio laid down by 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:
- Appellants challenging Order-in-Original passed by Commissioner
- Dispute period from March 2005 to June 2009
- Cenvat credit denial by department
- Applicability of cenvat credit on cement, TMT bar, and structural items

Analysis:
1. The appellants filed appeals against the Order-in-Original passed by the Commissioner for the period from March 2005 to June 2009. The dispute revolved around the denial of cenvat credit by the department.

2. The appellants, engaged in manufacturing Ferro Chrome and Stainless Steel, availed cenvat credit for input materials used in supporting machinery and structures in their factory. The department contested this credit. The Tribunal examined precedents to determine the eligibility of cenvat credit on cement and TMT bars used in laying foundations.

3. Citing the case of Lafarge India Pvt. Ltd. vs. CCE and the judgment of the High Court of Madras in Commissioner of C.Ex. vs. India Cements Ltd., the Tribunal found that cenvat credit on cement used for capital goods was permissible. Similarly, for structural items, the Tribunal referred to the case of Singhal Enterprises Pvt. Ltd. vs Commissioner of Customs & Central Excise, Raipur, and held that the appellants were entitled to cenvat credit on welding electrodes and structural steel items.

4. The Tribunal discussed the decision of the Larger Bench in Vandana Global Ltd.'s case regarding the eligibility of iron and articles used as supporting structures for cenvat credit. While the amendment to Rule 2(a) was considered clarificatory by the Larger Bench, the Tribunal referenced the judgment of the Hon'ble Gujarat High Court in Mundra Ports & Special Economic Zone Ltd.'s case to highlight differing views on the retrospective application of the amendment.

5. Drawing from the Supreme Court's decision in CCE, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd., the Tribunal applied the user test to determine the eligibility of structural items as capital goods. It concluded that the structural items used in fabricating support structures for capital goods fell within the ambit of Rule 2(a) of the Cenvat Credit Rules, thus entitling the appellants to cenvat credit.

6. Based on the precedents and the application of the user test, the Tribunal set aside the impugned orders and allowed the appeals filed by the appellants, thereby resolving the dispute in favor of the appellants.