2018 (8) TMI 4 - AT - Central Excise

CENVAT Credit - inputs - Steel items used for laying foundation and for building supporting structures and also for making self-manufactured capital goods such as Hydraulic Press, Crane etc. - Held that - As per the decision of the Tribunal in the case of Singhal Engineering Enterprises Private Limited 2016 (9) TMI 682 - CESTAT NEW DELHI the appellant is entitled to avail the Cenvat Credit on the Iron & Steel items used for supporting structures for making self manufactured Capital Goods but they are not entitled to avail the credit on steel items used for laying foundation - Adjudicating authority is directed to re-quantify the demand of Cenvat Credit to disallow the credit on the iron and steel items used for laying foundation. Penalty - Held that - As the matter involved is regarding the interpretation of provisions of law, the penalty imposed is liable to be set aside. Appeal allowed in part by way of remand.

Summary

Issues:
- Admissibility of Cenvat Credit on steel items used for laying foundation and building supporting structures for self-manufactured capital goods.

Analysis:
The appellant, engaged in manufacturing various products classifiable under Chapter 73 of the Central Excise Tariff Act, faced a Show Cause Notice alleging inadmissible Cenvat Credit on steel items used for laying foundation and building supporting structures for self-manufactured capital goods. The Adjudicating authority disallowed the Cenvat Credit and imposed penalties. The Commissioner (Appeals) upheld the decision. The appellant argued citing a Tribunal decision allowing Cenvat Credit on steel items used for fabrication of supporting structures for capital goods, emphasizing the "user test" to determine if goods qualify as capital goods.

The Tribunal analyzed the case, distinguishing between steel items used for laying foundation and those used for supporting structures of capital goods. Referring to the "user test" established in previous judgments, the Tribunal found that steel items used for supporting structures qualify as capital goods and are eligible for Cenvat Credit. However, steel items used for laying foundation were deemed ineligible for credit. The Tribunal directed the Adjudicating authority to re-quantify the demand for Cenvat Credit, disallowing credit on steel items used for laying foundation. The penalty imposed was set aside due to the matter involving interpretation of legal provisions.

In conclusion, the appeal was disposed of with the modification that the appellant is not entitled to avail credit on steel items used for laying foundation, while being allowed to claim credit on steel items used for supporting structures of self-manufactured capital goods. The judgment emphasized the importance of the "user test" in determining the admissibility of Cenvat Credit on input materials for manufacturing processes.