2016 (12) TMI 1040 - AT - Central Excise

Whether Cenvat Credit with respect to items used in fabricated steel structures and fish plates are eligible to Cenvat Credit as capital goods? - Held that - It is observed from the case records that the items are used for making steel platform on which welding of railway wagons is undertaken by the Appellant. Such a steel structure/fish plate cannot be considered either as capital goods or inputs of such structures under Rule 2 of the CCR and accordingly Cenvat Credit has been correctly denied by the First Appellate Authority. So far as imposition of penalties is concerned, it is observed from the submissions made by the Appellant before the First Appellate Authority that certain favourable case laws on the issue were also existing. Accordingly, it is held that penalty imposed upon the Appellant is not justified and is accordingly set aside. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues involved:
1. Eligibility of Cenvat Credit for items used in fabricated steel structures and fish plates.
2. Imposition of penalties.

Detailed analysis:
Issue 1: The main issue in this case is whether Cenvat Credit can be availed for items used in fabricated steel structures and fish plates. The Appellant had utilized Cenvat Credit for these items during a specific period. The Revenue contended that these items did not fall within the definition of capital goods under Rule 2 of the Cenvat Credit Rules, 2002. The CESTAT reviewed the Order-in-Appeal and found that the fabricated steel structures and fish plates used by the Appellant were not considered as capital goods or inputs under the CCR. Therefore, the Cenvat Credit was correctly denied by the First Appellate Authority.

Issue 2: The second issue pertains to the imposition of penalties. The Appellant had argued before the First Appellate Authority that there were favorable case laws supporting their position. Considering this, the Tribunal held that the penalty imposed on the Appellant was not justified and subsequently set it aside. Therefore, the appeal was allowed only in relation to the imposition of penalties, with the rest of the decision being upheld.

In conclusion, the Tribunal ruled that the items used in fabricated steel structures and fish plates were not eligible for Cenvat Credit as capital goods. Additionally, the penalty imposed on the Appellant was deemed unjustified and was set aside. The decision was pronounced in the open court, with the appeal being allowed only with respect to the penalty issue.