2016 (12) TMI 145 - AT - Central Excise

CENVAT credit - MS beams, MS plates, flats, channels and angles etc - it is not disputed that the subject items were received in the factory of the appellant. The main contention of the Department is that the appellant has not established the purpose for which the subject items have been used. - Held that - On perusal of the records, it is seen that the appellant has used the subject items for making moulds, erection of overhead crane, tracks for movement of goods, etc. The Department does not have the case that the subject items were used for laying foundation or construction of shed. The issue whether the subject items can be used for fabrication/manufacture of capital goods/parts/accessories is settled in the case of CCE, Jaipur Vs, Rajasthan Spinning & Weaving Mills Ltd. 2010 (7) TMI 12 - SUPREME COURT OF INDIA where applying the user test, it was held that steel plates and MS channels used for fabrication of capital goods also under the ambit of definition of capita goods. The appellant is eligible for the credit - appeal allowed - decided in favor of appellant.

Summary

Issues:
Alleged irregular availment of CENVAT credit on duty paid items, purpose of subject items usage, denial of credit as per law.

Analysis:

1. Alleged irregular availment of CENVAT credit: The appellants were accused of irregularly availing CENVAT credit on duty paid items like MS beams, plates, flats, channels, and angles. The original authority confirmed a demand of ?2,49,989 along with penalties. The Commissioner(Appeals) upheld this decision, leading the appellants to appeal before the Tribunal.

2. Purpose of subject items usage: The appellant's counsel explained that the subject items were used for making moulds, erecting overhead cranes, and laying tracks for goods movement. They provided details to the Department regarding the usage. The Department contended that the appellant failed to sufficiently prove the purpose of usage, resulting in the denial of credit as per law.

3. Denial of credit as per law: The Department argued that the appellant did not establish with enough evidence the purposes for which the subject items were used, justifying the denial of credit. However, upon review, it was found that the subject items were indeed used for making moulds, erecting overhead cranes, and laying tracks for goods movement. The Department did not dispute this usage but questioned the lack of evidence regarding the purpose.

4. Legal precedent and decision: The Tribunal referred to various legal cases cited by the appellant, including CCE Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd. The user test was applied, concluding that steel plates and MS channels used for fabricating capital goods fall under the definition of capital goods. Relying on previous judgments, the Tribunal held that the appellant was eligible for the credit. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential reliefs.

In conclusion, the Tribunal found in favor of the appellant, allowing them to avail the CENVAT credit on the subject items used for manufacturing purposes, based on established legal precedents and the evidence presented.