2014 (10) TMI 801 - HC - Central Excise

Cenvat Credit - capital goods - structural steel items viz., M.S.Plates, Angles, Channels and HR Sheets used for civil construction activity - whether M.S. Flates, Plates and Angles used as a capital goods are entitled to the benefit of modvat credit under sec.57Q - Held that - his Court in the case of India Cements Limited 2014 (7) TMI 881 - MADRAS HIGH COURT applied the principles laid down in the decision of Commissioner of Central Excise Jaipur V. Rajasthan Spinning & Weaving Mills Ltd. 2010 (7) TMI 12 - SUPREME COURT OF INDIA and held that the steel plates and M.S. Channels used in the fabrication of chimney would fall within the ambit of capital goods - credit allowed - decided in favor of assessee.

Summary

Issues:
1. Eligibility of Modvat credit on M.S. Flats, Plates, and Angles under Rule 57Q of Central Excise Rules, 1944.

Analysis:
The appeal was filed against the Final Order passed by the Customs, Excise, and Service Tax Appellate Tribunal, Chennai, regarding the eligibility of Modvat credit on certain items under Rule 57Q of the Central Excise Rules, 1944. The respondent, engaged in the manufacture of Aluminium and related articles, had taken credit of duty in RG 23C Registers. A show cause notice was issued, challenging the credit taken on certain goods as "capital goods" under Rule 57Q. The Assistant Commissioner disallowed credit for specific items, including MS Flats, Plates, and Angles, leading to the present appeal.

The Commissioner (Appeal) allowed Modvat credit on MS Flats, Plates, and Angles, stating that they were eligible based on previous decisions distinguishing their usage as parts of a plant. The Department appealed this decision, arguing that these items were eligible for capital goods credit under Rule 57Q. The Tribunal upheld the eligibility of these goods for capital goods credit for the period before 1996, following a previous decision. The High Court, considering the user test and previous rulings, affirmed the Tribunal's decision, rejecting the Revenue's plea and holding that the items were part of the final products, thus entitled to Modvat credit.

In conclusion, the High Court dismissed the appeal, confirming the Tribunal's decision on the eligibility of Modvat credit for M.S. Flats, Plates, and Angles under Rule 57Q. The Court relied on the user test and past judgments to support the assessee's entitlement to the credit, emphasizing that the items formed part of the final products, leading to a ruling against the Revenue and in favor of the assessee.