2016 (11) TMI 824 - AT - Central Excise

Demand - CENVAT credit - inputs and capital goods - Rule 2(K) of the Cenvat Credit Rules, 2004 - whether on the steel items, the assessee is entitled to take cenvat credit used in manufacture of structure, capital goods, parts, accessories, components of capital goods used for joining pipes in the plants, welding etc. with the factory of production or not for the period August 2006 to December 2008? - Held that - user test is to be applied for structural items used for fabrication of support structure and the same would be fall within the ambit of capital goods as contemplated under Rule 2(a) (A) of the CCR, 2004, therefore, the cenvat credit of duty paid on welding electrodes was allowed - reliance placed on the decision of the case of Singhal Enterprises Pvt. Ltd 2016 (9) TMI 682 - CESTAT NEW DELHI . I hold that as the period involved in the matter is that prior to 07.07.2009, therefore, the amended definition of input w.e.f. 07.07.2009 is not applicable to the facts of this case. Therefore, the assessee has rightly availed cenvat credit on inputs in question is allowed.

Summary

Issues:
1. Admissibility of cenvat credit on steel items used in the manufacture of structures, capital goods, parts, accessories, and components of capital goods for the period August 2006 to December 2008.

Analysis:
The case involved a dispute regarding the admissibility of cenvat credit on certain steel items used by the assessee in the manufacture of various goods. The audit alleged that the assessee wrongly availed cenvat credit on specific inputs categorized as capital goods and inputs under the Cenvat Credit Rules, 2004. The adjudicating authority confirmed the demand, imposing penalties based on the decision of the Larger Bench of CESTAT in the case of Vandana Global Ltd. The Commissioner (A) upheld the demand on certain inputs but allowed credit on inputs used in the fabrication of storage tanks. The main contention was whether the assessee was entitled to cenvat credit on the steel items used during the mentioned period.

The assessee argued that the amendments to the Cenvat Credit Rules in 2009 were clarificatory and not retrospective in nature. They relied on various judicial decisions, including those by the Gujarat High Court, the Supreme Court, and the Madras High Court, which supported the eligibility of cenvat credit on steel items used in fabrication. The assessee contended that the user test should be applied to determine whether the items fell within the ambit of capital goods as per the Rules.

On the other hand, the Revenue supported the decision of the Larger Bench in the Vandana Global Ltd. case, asserting that the amendments were retrospective. The Tribunal analyzed the definitions of "input" under the Cenvat Credit Rules before and after the 2009 amendment. The Tribunal noted that various High Courts had held that the amendments were clarificatory and not retrospective. Referring to decisions by different High Courts, including the Gujarat, Calcutta, and Madras High Courts, the Tribunal concluded that the assessee was entitled to cenvat credit on the steel items used in the manufacture of structures and capital goods during the relevant period.

Based on the precedents and the interpretation of the relevant legal provisions, the Tribunal held that the assessee had rightly availed cenvat credit on the inputs in question. The Tribunal emphasized that since the period in question was before the 2009 amendment, the amended definition of input was not applicable to the case. Therefore, the denial of cenvat credit by the lower authorities was set aside, and the assessee was allowed to claim the credit on the steel items used for manufacturing purposes.

In conclusion, the Tribunal ruled in favor of the assessee, allowing the cenvat credit on the steel items used in the production process during the specified period, based on the interpretation of the relevant legal provisions and the precedents set by various High Courts.