2017 (3) TMI 924 - AT - Central Excise

CENVAT credit - structural steel items such as MS Ingots, HR plate, HR Coil, MS Plate etc. falling under chapter 72 & 73 of the Central Excise Tariff Act, 1985 which have been used for fabrication of support structures for capital goods - Held that - Cenvat Credit on such steel items used for fabrication of structures of capital goods had been allowed by the Tribunal in several decisions - reliance was placed in the case of M/s. Singhal Enterprises Private Limited Versus The Commissioner Customs & Central Excise, Raipur 2016 (9) TMI 682 - CESTAT NEW DELHI , where it was held that Applying user test , structural items used in the fabrication of support structures would fall within the ambit of Capital Goods as contemplated u/r 2(a) of the CCR, hence will be entitled to the Cenvat Credit - appeal allowed - decided in favor of appellant.

Summary

Issues:
Dispute over Cenvat Credit on structural steel items used for fabrication of support structures for capital goods.

Analysis:
The appeal was filed against the order passed by the Commissioner (A) Jaipur regarding the Cenvat Credit availed by the appellant on structural steel items used for fabrication of support structures for capital goods. The Revenue contended that the Cenvat Credit was not leviable, leading to a show cause notice being issued to disallow the credit amounting to ? 22,89,208. This demand was confirmed by the original authority and upheld in the impugned order, prompting the appeal.

The appellant, engaged in tyre manufacturing falling under Chapter 40, argued in favor of availing Cenvat Credit on the steel items. The advocate cited various tribunal decisions supporting the appellant's stance, including cases like Singhal Enterprises Pvt. Ltd. Vs. Commissioner of Customs and Central Excise Raipur, SKS Ispat & Power Ltd. Vs. CCE, and Lafarge India Pvt. Ltd. Vs. CCE. The advocate highlighted the "user test" principle derived from previous court judgments to establish that the structural steel items used for support structures for capital goods should be considered as parts of the relevant machines, falling within the definition of "Capital Goods" under the Cenvat Credit Rules.

Referring to the decision in the case of Singhal Enterprises Pvt. Ltd., the Tribunal emphasized the application of the "user test" to determine the eligibility of structural items for Cenvat Credit. It was concluded that the structural items used for fabrication of support structures indeed fell within the ambit of "Capital Goods" as defined under the Cenvat Credit Rules. Consequently, the impugned order was set aside, and the appeal was allowed based on the precedent set by the Tribunal in similar cases.

In line with the Tribunal's decision and the application of the "user test" principle, the impugned order disallowing the Cenvat Credit on structural steel items used for fabrication of support structures for capital goods was overturned, and the appeal was allowed.