2018 (10) TMI 1468 - AT - Central Excise

CENVAT Credit - inputs/capital goods - steel structural items - Rule 2(a) and 2(k) of Cenvat Credit Rules, 2004 - Held that - The appellant s case is squarely covered by the Division Bench of this Tribunal in the case of Singhal Enterprises Pvt. Ltd. Vs. CCE, Raipur 2016 (9) TMI 682 - CESTAT NEW DELHI wherein it has been held that if the steel items such as MS Angles, Channels, TMT Bar etc. are used in fabrication of support structures for various capital goods - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of cenvat credit on steel structural items excluded from Cenvat Credit Rules, 2004
- Rejection of appeal by Commissioner (Appeals) based on lack of evidence of actual usage of goods as supporting structures for capital goods

Analysis:
1. The appellant, engaged in manufacturing Executive Paper, availed cenvat credit on steel structural items excluded from Cenvat Credit Rules, 2004. A show-cause notice was issued for recovery of cenvat credit, interest, and penalty. The Assistant Commissioner confirmed the demand and penalty, which was challenged in appeal before the Commissioner (Appeals).

2. The Commissioner (Appeals) rejected the appeal on the grounds that the appellant failed to provide evidence proving the actual usage of steel items as supporting structures for capital goods. The appellant contended that the goods were used in fabrication of support structures for capital goods, making them eligible for cenvat credit.

3. The consultant for the appellant argued that the impugned order lacked legal sustainability as it did not consider the facts and binding judicial precedents. He cited cases supporting the eligibility of cenvat credit on steel items used as support structures for capital goods.

4. The Assistant Commissioner defended the impugned order, leading to a hearing where both parties presented their arguments. The consultant emphasized the use of steel items for supporting structures of capital goods, while the Assistant Commissioner stood by the rejection of the appeal.

5. The Judicial Member, after reviewing the submissions, found the appellant's case aligned with a previous Tribunal decision in Singhal Enterprises Pvt. Ltd. Vs. CCE, Raipur. The Tribunal's decision established that if steel items are used in fabricating support structures for capital goods, cenvat credit is permissible based on the 'user test' from the Apex Court's ruling in Jawahar Mills Ltd. Consequently, the appeal was allowed, and the impugned order was set aside, granting consequential relief.

6. The judgment, delivered on 26/10/2018 by the Judicial Member, highlights the importance of proving the usage of goods as supporting structures for capital goods to avail cenvat credit on excluded items, as established by relevant judicial precedents and legal principles.