2017 (7) TMI 844 - AT - Central Excise

CENVAT credit - Iron Steel items used in the course of setting up of the said Sponge Iron Plants - Revenue entertained a view that these items cannot be at all categorised as inputs or capital goods in terms of CENVAT Credit Rules, 2002 and initiated proceedings against the respondent to recover the credits already availed by them - Held that - the main thrust of the argument of the Revenue is that the iron and steel items like angles, sheets, plates etc. were mainly used in the support structure of these heavy capital fabrications and will not satisfy the criteria of parts and components or accessories of such machinery. We find that such observation has to be supported by material facts. The same is not available in the present appeal - appeal dismissed - decided against appellant.

Summary

Issues:
Eligibility of respondent to avail CENVAT credit on iron and steel items used in setting up Sponge Iron Plant.

Analysis:
The dispute in the case revolves around the eligibility of the respondent to avail CENVAT credit on various iron and steel items used in setting up a Sponge Iron Plant. The Revenue contended that these items do not qualify as inputs or capital goods under the CENVAT Credit Rules, 2002. The Show Cause Notice issued aimed to recover the credits availed by the respondent, totaling to &8377; 1,20,61,289. The Ld. Commissioner allowed credit on various iron and steel items but disallowed credit on welding electrodes. The Revenue appealed this decision, arguing that the iron and steel items were used for support structures and not as parts or accessories of capital goods, as per the CENVAT Credit Rules.

The Ld. A.R. for the Revenue emphasized that the iron and steel items used were of a general nature and not specifically identified as parts or accessories of any identifiable capital goods. On the other hand, the Ld. Counsel for the respondent supported the findings of the original authority, highlighting the usage and nature of the iron and steel items as discussed in the impugned order. The original authority examined various capital goods like conveyor belts, hoppers, coolers, and boilers, applying the principle of user test as established by the Hon'ble Supreme Court in previous cases.

Upon hearing both sides and reviewing the records, the Tribunal focused on the main issue of the eligibility of the respondent for CENVAT credit on the iron and steel items. The Tribunal noted that the original authority had thoroughly examined the usage of these items in capital goods and components fabricated within the respondent's plant. The Tribunal pointed out that the user test, as laid down by the Hon'ble Supreme Court, needed to be applied to determine whether the iron and steel items qualified as parts or components of capital goods. The Tribunal referenced various decisions by the Hon'ble Supreme Court, High Courts, and previous Tribunal cases that supported the eligibility of credit in similar circumstances.

In conclusion, the Tribunal dismissed the appeal, stating that the impugned order had carefully analyzed the issues and reached a sustainable conclusion in line with the decisions of the Hon'ble Supreme Court, various High Courts, and the Tribunal. The Tribunal found no reason to interfere with the order, ultimately upholding the eligibility of the respondent for CENVAT credit on the iron and steel items used in setting up the Sponge Iron Plant.