2018 (3) TMI 344 - AT - Central Excise

CENVAT credit - items like angles, channels, joists, TMT bars, mill plates etc. - denial on the ground that these items are not capital goods nor components in machineries and therefore are not covered under the definition of inputs - Held that - issue covered by the decision in the case of M/s. Singhal Enterprises Private Limited Versus The Commissioner 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 Involved:
Denial of cenvat credit on Central Excise duty paid on certain items like angles, channels, joists, TMT bars, mill plates; Interpretation of definition of inputs and capital goods.

Analysis:

Issue 1: Denial of Cenvat Credit
The appellant appealed against the denial of cenvat credit on items used for manufacturing/fabrication during January 2006 to November 2010. The lower authorities concluded that these items were not capital goods or components in machinery and thus not covered under the definition of inputs. The appellant argued that the items manufactured from these inputs, such as coal cyclones, chutes, coolers, castings, vibrofeeders, etc., should be considered capital goods. They referenced Tribunal judgments and a Supreme Court decision to support their claim.

Issue 2: Interpretation of Definition of Inputs and Capital Goods
The appellant relied on Tribunal judgments and a Supreme Court decision to argue that the items in question should be considered inputs and capital goods based on the user test. They highlighted the need for support structures for capital goods and how the fabricated items were essential components of machinery. The Tribunal referred to previous rulings and the user test to determine that the items used in the fabrication of support structures qualified as capital goods under the Cenvat Credit Rules. The Tribunal held that the denial of cenvat credit amounting to approximately ?1.91 crores was unsustainable based on the settled legal principles.

In conclusion, the Tribunal upheld the denial of a smaller amount due to lack of details but allowed the majority of the cenvat credit claimed by the appellant. The judgment clarified the application of the user test in determining the eligibility of items as inputs and capital goods, providing a comprehensive analysis of relevant legal precedents.