2017 (1) TMI 20 - AT - Central Excise

CENVAT credit - Angles, channels, beams, flat, joist and plates etc. - Held that - the issue is squarely covered by the decision of the Tribunal in the case of Lafarge India Pvt. Limited vs. C.C.E., Raipur 2016 (10) TMI 615 - CESTAT NEW DELHI , where it was 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 - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of cenvat credit on certain steel items used in manufacturing of ferro alloys.

Analysis:
The appeal was filed against the Order-in-Original denying cenvat credit on steel items used in the manufacturing of ferro alloys. The issue was whether the steel items, such as angles, channels, beams, etc., used in the fabrication of support structures for capital goods were eligible for cenvat credit. The Tribunal referred to previous decisions to establish the eligibility of such items for credit. The Tribunal noted that steel items used in the fabrication of capital goods inside the manufacturer's premises are eligible for credit, applying the user test as laid down by the Supreme Court. The Tribunal cited various judgments and legal precedents to support the allowance of cenvat credit on such steel items used in the manufacturing process.

Another decision by the Tribunal was referenced, where the denial of credit on structural steel items was challenged. The Tribunal discussed the amendment to Rule 2(a) defining inputs and referred to the decision of the Larger Bench regarding the eligibility of iron and articles used as supporting structurals for credit. The Tribunal highlighted the interpretation of the retrospective application of the amendment and referenced a decision by the Gujarat High Court on the matter. Ultimately, the Tribunal referred to a Supreme Court judgment involving steel plates and MS channels used in the fabrication of a chimney, where the user test was applied to determine the eligibility for cenvat credit. The Tribunal concluded that the structural items used in the fabrication of support structures for capital goods fell within the definition of capital goods as per the Cenvat Credit Rules, thus entitling them to cenvat credit.

Based on the legal precedents and settled propositions, the impugned order denying cenvat credit on steel items was set aside, and the appeal was allowed with consequential relief. The Tribunal's decision was in favor of allowing cenvat credit on the steel items used in the manufacturing process of ferro alloys, establishing their eligibility as capital goods under the Cenvat Credit Rules.