2017 (1) TMI 141 - AT - Central Excise

Cement - CENVAT credit - various structural/ steel items like TMT bars coil steel tubes and pipes modified armor plate rectangular bar PCC chequred plate chain conveyor etc. falling under Chapters 72 and 73 of the First Schedule to the Central Excise Tariff Act 1985 - Held that - the user test evolved by the Apex Court in the case of CCE Coimbatore Vs. Jawahar Mills Ltd. 2001 (7) TMI 118 - SUPREME COURT OF INDIA which is required to be satisfied to find out whether or not particular goods could be said to be capital goods - When we apply the user test to the case in hand we find that the structural items used in the fabrication of support structures would fall within the ambit of capital goods as contemplated under Rule 2(a) of the Cenvat Credit Rules hence will be entitled to the Cenvat credit - appeal allowed - decided in favor of assessee.

Summary

Issues:
Eligibility of the appellants for availing Cenvat credit on steel items falling under Chapters 72 and 73 of the Central Excise Tariff Act, 1985.

Analysis:

The present appeals revolve around the eligibility of the appellants to avail Cenvat credit on steel items such as TMT bars, coil, steel tubes, pipes, and other structural items under Chapters 72 and 73 of the Central Excise Tariff Act, 1985. The appellants, engaged in cement manufacturing, had availed Cenvat credit on inputs and capital goods. The dispute arose when proceedings were initiated against them for allegedly wrongly availing credit on the mentioned steel items. The appellant contended that they are entitled to the credit, citing various decisions in support of their claim. The key contention was whether the structural steel items used in support structures for capital goods could be considered as parts of relevant machines, thus falling within the definition of 'capital goods' under the Cenvat Credit Rules.

The Tribunal referred to the decision of the Apex Court in a similar case, where the 'user test' was applied to determine whether specific goods could be classified as 'capital goods.' By applying the 'user test' to the current case, it was established that the structural steel items were utilized in fabricating support structures for capital goods like kilns, conveyors, and furnaces. The appellants argued that these capital goods needed suitable support for smooth functioning and that the structural items were modified accordingly. Consequently, the goods fabricated using these structural items were deemed as parts of the relevant machines, falling within the definition of 'capital goods' as per Rule 2(a) of the Cenvat Credit Rules. Therefore, the Tribunal concluded that the appellants were eligible for Cenvat credit on the mentioned steel items and allowed the appeals in their favor.

In conclusion, the Tribunal ruled in favor of the appellants, holding that the structural steel items used in the fabrication of support structures for capital goods qualified as 'capital goods' under the Cenvat Credit Rules. The decision was based on the application of the 'user test' and the necessity for suitable support for capital goods, ultimately entitling the appellants to avail Cenvat credit on the disputed steel items.