2017 (3) TMI 1134 - AT - Central Excise

CENVAT credit - fabrication of support structures - Boiler Parts Silo System Boiler Radiation Hopper Turbine Air Unit EOT Crane Hook Conveyor Materials Handling System Platform for kiln coal drier Stack Structure cooling tower Girth Gear Kiln Gear Box etc - denial on the ground that these items are neither inputs nor capital goods - Held that - these items are essential for functioning of machines and its alignment - As the use of the items has been explained by the appellant which shows that these items were used for fabrication of machinery parts. We find that the issue is covered by the decision of the Tribunal in the case of Singhal Enterprises Pvt. Limited vs. CCE Raipur 2016 (9) TMI 682 - CESTAT NEW DELHI where it was held that applying the User Test to the facts in hand we have no hesitation in holding 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 CCR hence will be entitled to the Cenvat Credit - credit allowed - appeal allowed - decided in favor of assessee.

Summary

Issues:
Eligibility for Cenvat credit on items like Boiler Parts, Silo System, Turbine Air Unit, etc.

Analysis:
The dispute revolved around the eligibility for Cenvat credit on various items used in the manufacturing process, such as Boiler Parts, Silo System, Turbine Air Unit, etc. The appellant, a manufacturer of Sponge Iron and related products, had availed Cenvat credit amounting to a specific sum during a particular period. The Department contended that these items did not qualify as inputs or capital goods under Rule 2(a) of the Cenvat Credit Rules, hence challenging the eligibility of Cenvat credit. The Commissioner, through an order-in-original, confirmed the demand for Cenvat credit along with interest and imposed a penalty on the appellant. The appellant, dissatisfied with this decision, filed an appeal challenging the order.

Upon hearing both sides and examining the record, the appellant argued that the items in question were essential for the functioning and alignment of machines, supported by a Chartered Engineer certificate. The appellant relied on a previous Tribunal decision in a similar case to support their claim. The Tribunal's decision highlighted the applicability of the "user test" to determine whether certain goods could be considered as capital goods, emphasizing the need for support structures for the smooth functioning of machines. The Tribunal referenced several judgments and decisions, including those of High Courts and the Supreme Court, to support the appellant's claim for Cenvat credit on such items used in the fabrication of support structures for capital goods.

Further, another Tribunal decision reiterated the consistent stance that steel items used in the fabrication of capital goods and their accessories within the manufacturer's premises were eligible for credit, applying the "user test" as established by the Supreme Court. This decision also referenced various case laws and judgments supporting the eligibility of Cenvat credit on items like MS Plates, angles, channels, etc., used in the fabrication and erection of technological structures. The Tribunal emphasized that the structural items in question were integral to the functioning of capital goods and, therefore, fell within the ambit of "Capital Goods" as defined under Rule 2(a) of the Cenvat Credit Rules.

Ultimately, the Tribunal ruled in favor of the appellant, holding that they had correctly availed Cenvat credit on the items in question. The impugned order was set aside, and the appeal filed by the appellant was allowed with any consequential relief deemed necessary. The decision underscored the importance of support structures for capital goods and reiterated the application of the "user test" to determine the eligibility for Cenvat credit on such items used in the manufacturing process.