2023 (11) TMI 674 - AT - Central Excise

CENVAT Credit - capital goods/inputs - Angles, Channels, Beams, Joists, Sheets, Plate, Coils etc - HELD THAT - The issue is no longer res integra. The said issue has been settled by the Hon ble Chhattisgarh High Court in the case of M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT , wherein it has been held that any steel item which has been used for fabrication of capital goods or inputs is entitled for cenvat credit in terms of Rule 2(l)/2(k) of the Cenvat Credit Rules, 2004. Thus, the Angles, Channels, Beams, Joists, Sheets, Plate, Coils etc used in the manufacture of furnace equipment and furnace structure, raw material handling system and pollution control equipment, are eligible for credit as inputs - the demand confirmed in the impugned order is not sustainable. As the demand itself is not sustainable, the question of demanding duty or imposing penalty does not arise. Appeal allowed.

Summary

Issues involved:
The appeal against the Order-in-Original confirming duty demand, interest, and penalty on availed Cenvat credit for iron and steel products used in manufacturing capital goods. The key issue is the eligibility of Angles, Channels, Beams, Joists, Sheets, Plate, Coils, etc., as 'inputs' for Cenvat credit under the Cenvat Credit Rules, 2004.

Details of the Judgment:

Issue 1: Eligibility of Angles, Channels, Beams, Joists, Sheets, Plate, Coils, etc., as 'inputs' for Cenvat credit:

The appellant claimed Cenvat credit on these steel products used in the manufacture of capital goods, supported by a Chartered Engineer's Certificate. The department contended that these items do not qualify as 'Capital goods' under Rule 2(a) of the Cenvat Credit Rules, 2004. The Commissioner disallowed the credit, leading to the appeal.

Decision:
The Tribunal referred to the decision of the Hon'ble Chhattisgarh High Court and its own precedent in M/s Uniglobal Papers Pvt. Ltd. case. They emphasized the 'user test' principle from the Supreme Court's judgment in CCE, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd. The Tribunal held that the structural steel items used in fabricating support structures for capital goods qualify as 'Capital Goods' under Rule 2(a) of the Cenvat Credit Rules, entitling them to Cenvat credit. Citing the High Court of Karnataka's ruling in Commissioner of Central Excise, Bangalore-II v. SLR Steels Ltd., the Tribunal concluded that the demand for duty and penalty was unsustainable, allowing the appeal.

Outcome:
The appeal was allowed, and the demand confirmed in the impugned order was deemed unsustainable, thus negating the need for duty payment or penalty imposition.

This comprehensive summary highlights the issues involved, the arguments presented, key legal interpretations, and the final decision of the Appellate Tribunal CESTAT KOLKATA in the cited judgment.