2018 (3) TMI 692 - AT - Central Excise

CENVAT credit - HR Coil, MS Pipe, SS Tube, Joints etc., used for fabrication of capital goods and its supporting structures - 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. Even though in principle, the appellant are eligible to credit, however, the use of the said item is not supported by evidence, hence, the matter is remanded to the adjudicating authority for verification of the said facts - appeal allowed by way of remand.

Summary

Issues:
1. Admissibility of CENVAT credit on items used for fabrication of capital goods.
2. Interpretation of the definition of capital goods/input under Rule 2(a)/2(k) of CCR, 2004.
3. Application of the user test to determine eligibility for CENVAT credit.
4. Retrospective applicability of amendments to Rule 2(a) defining "Input."
5. Reference to judicial precedents regarding credit eligibility on structural steel items.

Analysis:
1. The appeals were filed against the order confirming the demand for wrongly availed CENVAT credit on various items used for fabrication of capital goods. 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. The Ld. Advocate cited a judgment of the Principal Bench at Delhi to support their claim.

2. The Ld. AR for the Revenue reiterated the findings of the Ld. Commissioner (Appeals) rejecting the appellant's appeals. The issue was addressed by the Principal Bench at Delhi in a specific case concerning the admissibility of credit on structural steel items used for support structures of capital goods.

3. The judgment highlighted the importance of the user test in determining whether goods qualify as capital goods. The decision referenced a Supreme Court case regarding the use of steel plates and MS channels in the fabrication of support structures, emphasizing the need for items to facilitate the smooth functioning of machines to be considered as parts of relevant machines.

4. The judgment discussed the retrospective applicability of amendments to Rule 2(a) defining "Input." It referenced a case where the Gujarat High Court held that an amendment made on a specific date could not be considered clarificatory and would apply prospectively.

5. Despite acknowledging the appellant's eligibility for credit, the judgment noted a lack of evidence supporting the use of the items in question. Therefore, the matter was remanded to the adjudicating authority for verification of facts. The appeal was allowed by way of remand, emphasizing the need for evidence to support the use of items for fabrication of capital goods.