2017 (1) TMI 294 - AT - Central Excise

CENVAT credit - steel items used in fabrication/manufacture of various capital goods - technological structures for supporting the capital goods - Held that - the subject matter is covered by Honble Madras High Court decisions in the cases of India Cement Ltd. Vs. CESTAT, Chennai 2015 (3) TMI 661 - MADRAS HIGH COURT and Com. of E. Ex., Tiruchirapalli Vs. India Cements Ltd 2011 (8) TMI 399 - MADRAS HIGH COURT . In both these decisions Honble Madras High Court refers to Honble Supreme Courts decision in the case of Commissioner Vs. Rajasthan Spinning & Weaving Mills Ltd. 2010 (7) TMI 12 - SUPREME COURT OF INDIA , where the Apex court allows CENVAT credit on steel items (Plates and M.S. Chennels) keeping in view of the user test - the appellant is be entitled to availment of Cenvat credit for the subject items - appeal allowed - decided in favor of appellant.

Summary

Issues:
Admissibility of Cenvat credit on steel items used in the fabrication of capital goods and technological structures.

Analysis:
The appellant, a manufacturing company, appealed against the Commissioner's order disallowing Cenvat credit amounting to ?2,28,32,558 on steel items used in the fabrication of capital goods and support structures. The appellant argued that the steel items were integral parts of the capital goods and should qualify for Cenvat credit under Rule 2(k) of Credit Rules. They contended that without these technological support structures, the operation of machinery would not be possible, making the steel items essential components. Additionally, the appellant cited legal precedents where Cenvat credit on steel items used in similar contexts was allowed, emphasizing the user test applied by the courts. The appellant also argued that the steel was used in the manufacture of dutiable final products and that the eligibility for credit should be determined before the items become part of immovable goods.

The Revenue, represented by the Ld. AR, reiterated the findings of the impugned order disallowing the Cenvat credit on the steel items.

Upon careful consideration of the submissions, case laws cited, and relevant precedents, the Tribunal found that the matter was covered by decisions of the Hon'ble Madras High Court, particularly referencing the Hon'ble Supreme Court's decision in the case of Commissioner Vs. Rajasthan Spinning & Weaving Mills Ltd. The Tribunal applied the user test and held that the appellant was entitled to avail Cenvat credit for the steel items used in the fabrication of capital goods and support structures. Consequently, the impugned order disallowing the credit was set aside, and the appeal was allowed with consequential relief to the appellant.