2018 (4) TMI 819 - AT - Central Excise

CENVAT credit - steel items like mill plates, channels, joists etc. - denial on the ground that these are structural items excluded from eligibility for credit - Held that - the eligibility of steel items for Cenvat credit has been a subject matter of decision by the Tribunal, Hon ble High Courts and the Hon ble Supreme Court in various cases - It has been held by the Tribunal consistently that the steel items when they were used in fabrication of capital goods and their accessories inside the manufacturing premises are eligible for credit - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Dispute regarding eligibility of credit on steel items for Cenvat credit under Cenvat Credit Rules, 2004.

Analysis:
The appeal challenged an order disallowing credit of duty on steel items like mill plates, channels, and joists, as these were considered structural items excluded from credit eligibility. The lower authority relied on a previous Tribunal decision in Vandana Global Ltd. to disallow the credit.

Upon review, it was found that the steel items were actually used for structures essential to the capital goods of the appellant unit, such as blower and wagon loading systems. A subsequent decision by the Hon'ble Chhattisgarh, Bilaspur held that such items are eligible for credit, overturning the Vandana Global Ltd. decision. The Tribunal in Prism Cement Unit II also observed that the retrospective application of the exclusion was not legally tenable.

The Tribunal noted that various courts and the Hon'ble Supreme Court had addressed the eligibility of steel items for Cenvat credit, emphasizing the principle that when steel items are used in fabricating capital goods and their accessories, they are eligible for credit. The "user test" principle established by the Supreme Court was applied, with reference to a recent decision in Singhal Enterprises.

Considering the consistent application of the Apex court and High Courts' rulings on similar cases, the Tribunal found the impugned findings unsustainable and set them aside, allowing the appeal.

In conclusion, the Tribunal's decision in this case clarified the eligibility of steel items for Cenvat credit, emphasizing the importance of the "user test" principle and the fabrication of support structures for capital goods. The ruling aligned with previous judicial interpretations and set aside the lower authority's decision to disallow the credit on structural steel items.