2019 (1) TMI 1300 - AT - Central Excise

CENVAT Credit - inputs/capital goods - M.S. Steel Sections such as Beam, Plates, Joists, Angles, Channels and GP sheets etc. used in the fabrication of structural ducts etc. - Held that - The actual use of the items could not be verified either by any Central Excise officer or any evidence available on record to establish that these items were used in the fabrication of capital goods and structures. To ascertain the said fact, the matter needs to be remanded to the adjudicating authority. The matter remanded to the adjudicating authority only for the purpose of ascertaining the use of the aforesaid items as claimed by the assessee - appeal allowed by way of remand.

Summary

Issues:
Admissibility of CENVAT Credit on items like angles, channels, beams, etc. used in the fabrication of structural capital goods.

Analysis:
The appeal was filed against an Order-in-Original passed by the Commissioner of Central Excise & Service Tax, Nagpur, regarding the availing of CENVAT Credit on certain items. The appellant, engaged in manufacturing excisable goods, claimed that the items in question were used in the fabrication of capital goods and were eligible for CENVAT Credit under the CENVAT Credit Rules, 2004. The appellant cited precedents such as Singhal Enterprises Pvt. Ltd. case and argued that the issue was settled. The Revenue, however, supported the findings of the Commissioner and emphasized the need to verify the actual use of the items based on the principle laid down in Vandana Global's case.

The Tribunal referred to the case of Singhal Enterprises Pvt. Ltd., where the issue of admissibility of CENVAT Credit on structural steel items used in the fabrication of support structures for capital goods was discussed. The Tribunal highlighted that the "user test" was crucial in determining whether the items could be considered as capital goods. It was established that the structural items used in the fabrication of support structures fell within the definition of 'Capital Goods' under Rule 2(a) of the CENVAT Credit Rules. The Tribunal upheld the decision of the Hon'ble Chhattisgarh High Court in this regard.

While the Tribunal agreed with the appellant's arguments, it acknowledged the Revenue's concern regarding the verification of actual use of the items. Due to the rejection of the appellant's contention based on the Vandana Global Ltd. case, the Tribunal decided to remand the matter to the adjudicating authority for further verification. The remand was deemed necessary to ascertain whether the items were indeed used in the fabrication of capital goods and structures, following the principles established in the Singhal Enterprises case.

In conclusion, the appeal was allowed by way of remand, and the matter was referred back to the adjudicating authority for verification of the actual use of the items claimed by the appellant in accordance with the precedents discussed during the proceedings.