2013 (7) TMI 494 - AT - Central Excise

Capital goods as defined under Rule 2(a) of the CENVAT Credit Rules (CCR), 2004 for purposes of CENVAT credit - MS angles, plates and rounds used for fabricating structural support to plant and machinery in factory Held that - In the case of Rajasthan Spinning & Weaving Mills Ltd. 2010 (7) TMI 12 - SUPREME COURT OF INDIA , the Hon ble Supreme Court found that the DG set fell under Heading No.85.02 Chapter 85, of First Schedule to the Central Excise Tariff Act and ipso facto got covered under Sl. No.3 of the table ibid. Court further noted that the chimney attached to the DG set was undisputedly covered by Sl. No.5 of the table ibid. On this basis, it was held that the chimney was an integral part of the DG set and, therefore, ms channels, plates, etc., used in its fabrication were to be treated as accessories in terms of Sl. No.5 of the table ibid - The facts of the present case are perfectly analogous to those of Rajasthan Spinning & Weaving Mills Ltd. (supra). It is not in dispute that ms angles, plates, etc., were used to fabricate structural support for machinery which was used for manufacturing excisable goods. It is, again, not in dispute that the machinery is squarely covered by clause (i) of Rule 2(a)(A) of the CCR, 2004 Consequently held that the ms angles, plates and rounds used for fabricating structural support for machinery would qualify to be capital goods for CENVAT credit Decided against the Revenue.

Summary

Issues:
1. Whether MS angles, plates, and rounds used for fabricating structural support to plant and machinery qualify as 'capital goods' under CENVAT Credit Rules.

Analysis:
1. The appeal involves the consideration of whether MS angles, plates, and rounds used for fabricating structural support to plant and machinery can be classified as 'capital goods' under Rule 2(a) of the CENVAT Credit Rules, 2004 for CENVAT credit purposes. The original authority denied the benefit, leading to recovery of CENVAT credit and imposition of a penalty. The Commissioner (Appeals) later granted the benefit to the appellant, resulting in the Revenue's present appeal.

2. The learned SDR argued that the items were excluded from the definition of 'input' and were not considered 'capital goods' based on a previous Tribunal's Larger Bench decision. The SDR requested setting aside the Commissioner's order.

3. In response, the counsel for the respondent cited judgments from the Supreme Court and the Madras High Court, emphasizing the applicability of the Supreme Court's ruling in a similar case. Drawing parallels between the cases, the counsel argued that the structural support fabricated by the respondent should be considered an integral part of plant and machinery, making the MS angles, plates, and rounds accessories. The counsel highlighted the absence of the apex Court's ruling during the Tribunal's Larger Bench decision.

4. Upon careful consideration, the judge found merit in the respondent's arguments. Drawing comparisons between relevant legal provisions and the Supreme Court's decision, the judge concluded that the structural support should be treated as an integral part of machinery, aligning with the Supreme Court's 'user test' approach. Consequently, the MS angles, plates, and rounds used for fabricating the support qualify as 'capital goods' for CENVAT credit purposes. The judge deemed the Tribunal's Larger Bench view outdated in light of the subsequent Supreme Court ruling, leading to the dismissal of the appeal.

This detailed analysis of the judgment highlights the legal intricacies involved in determining the classification of MS angles, plates, and rounds as 'capital goods' under the CENVAT Credit Rules, showcasing the application of legal precedents and interpretations in reaching a decision.