2018 (3) TMI 99 - AT - Central Excise

CENVAT credit - M.S. Flats used for earthing and connecting of 66KV Switch yard - pre-fabricated windows and doors used in the factory - Hardener chemicals used mainly for flooring in the factory for holding structural of capital goods - machines tools and accessories for fabrication of capital goods in the factory - Held that - identical issue decided 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 - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Eligibility of CENVAT credit on various structural items used for supporting structures of capital goods.

Analysis:
The case involved an appeal against an order passed by the Commissioner (Appeals I), Central Excise, Ahmedabad, regarding the appellant's alleged wrongful availment of CENVAT credit on specific items. The appellant had utilized M.S. Flats, pre-fabricated windows, doors, hardener chemicals, and machine tools for various purposes in the factory. The demand for recovery of the credit amount, along with interest and penalty, was confirmed after adjudication. The appellant contended that these items qualified as capital goods/inputs under Rule 2(a)/2(k) of CCR, 2004, citing a judgment from the Principal Bench at Delhi in a similar case.

The Advocate for the appellant argued that the items were used for supporting structures of capital goods, making them eligible for credit as per the defined rules. The Revenue's representative reiterated the findings of the Commissioner (Appeals). The Tribunal examined the issue in light of a judgment by the Principal Bench at Delhi in a similar case involving the admissibility of credit on structural steel items used for support structures of capital goods. The Tribunal referenced the decision in the case of Singhal Enterprises Pvt. Ltd. vs. Commissioner of Central Excise & Customs, Raipur, where it was established that structural items used in the fabrication of support structures for capital goods fell within the definition of 'Capital Goods' under Rule 2(a) of the Cenvat Credit Rules. The Tribunal applied the 'user test' to determine that the structural items were essential components for the functioning of capital goods and thus eligible for CENVAT credit.

Based on the precedent set by the aforementioned judgment, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant. The decision was pronounced in the open court on 19.01.2018.