2016 (10) TMI 615 - AT - Central Excise

Denial of CENVAT credit - imposition of penalty - manufacture of cement liable to Central Excise Duty - duty paid on various steel items like TMT bars, Coil, Steel tubes and pipes, modified armor plate, rectangular bar, PCC Chequred plate, chain conveyor etc. falling under Chapter 72 and 73 of the Central Excise Tariff Act, 1985 - eligibility of iron steel structure items for cenvat credit either as an input or as a capital goods - Held that - the decision in the case of Commissioner vs. Rajasthan Spinning & Weaving Mills Ltd. 2010 (7) TMI 12 - SUPREME COURT OF INDIA relied upon where it was held that the steel items when they are used in fabrication of capital goods and their accessories inside the manufacturer premises are eligible for credit by applying user test - CENVAT credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Eligibility of appellant for availing cenvat credit of duty paid on various steel items under Chapter 72 and 73 of the Central Excise Tariff Act, 1985.

Analysis:
The appeal challenged the order of the Commissioner of Central Excise, Raipur, regarding the eligibility of the appellant for cenvat credit on steel items used in the manufacture of cement. The original authority disallowed the cenvat credit and imposed a penalty. The disputed items were detailed, showing their usage in assembling machinery for cement production and construction projects. The original authority held that since the steel items were used in structures attached to earth, they were not marketable and thus not eligible for credit.

Upon examination, the Tribunal found that the original authority wrongly emphasized the excisability of emerging structures as capital goods for determining cenvat credit eligibility. The Tribunal noted that the Cenvat Credit Rules do not require capital goods to be marketable for credit eligibility. Various case laws and circulars cited by the original authority were deemed irrelevant.

The Tribunal considered previous decisions on the eligibility of steel items for cenvat credit, including cases where steel items were used in the fabrication of capital goods. The appellant argued that even if the steel items were not directly used in manufacturing capital goods, they were used in repair and maintenance, making them eligible for credit. The Tribunal referenced several cases supporting the appellant's claim, emphasizing the user test for determining capital goods eligibility.

In line with previous decisions and the user test principle, the Tribunal found no merit in the original order disallowing cenvat credit on the steel items. Citing various judgments from the Tribunal, High Courts, and the Supreme Court, the Tribunal set aside the impugned order and allowed the appeal. The decision was pronounced on 27.09.2016.