2017 (8) TMI 262 - AT - Central Excise

CENVAT credit - M.S. Channels, M.S. Angles, M.S. Bar, H. R. Coils, Plates, M. S. beam, Steel Tub, P. F. Beam, ERW Pipe, Welding Electrodes etc., used for fabrication of capital goods - Held that - there is no hesitation to observe that credit on M.S. Angles, Channels, Beams etc. used in the fabrication of capital goods as well as structure for capital goods, and being supported by the evidence of Chartered Engineers Certificate are eligible to CENVAT credit - similar issue decided 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 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 Cenvat Credit Rules, hence will be entitled to the CENVAT Credit - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of CENVAT credit on various items used for fabrication of capital goods.
2. Interpretation of the definition of 'input' under Rule 2(k) of CCR, 2004.
3. Application of the 'user test' to determine if structural items qualify as capital goods.

Analysis:

Issue 1:
The appeal challenged the order confirming the demand for recovery of CENVAT credit on items like M.S. Channels, Angles, Beams, etc., used for fabricating capital goods. The appellant argued that these items were eligible for credit as per the definition of 'input' under Rule 2(k) of CCR, 2004. The dispute centered around whether these structural items could be considered as capital goods or not.

Issue 2:
The appellant relied on various judicial precedents, including a Supreme Court judgment and decisions from High Courts, to support their claim for CENVAT credit. The Tribunal analyzed the principles established by different courts and observed that the 'user test' was crucial in determining whether the structural items qualified as capital goods. Reference was made to the 'user test' established by the Supreme Court in previous cases to assess the eligibility of the items in question.

Issue 3:
The Tribunal referred to a judgment by the Principal Bench at Delhi, which discussed the admissibility of CENVAT credit on structural steel items used in the fabrication of support structures for capital goods. The Tribunal highlighted the importance of the 'user test' in evaluating whether the structural items were integral components of the relevant machines. Based on the evidence provided, including Chartered Engineers' Certificate, the Tribunal concluded that the M.S. Angles, Channels, Beams, etc., used in the fabrication of capital goods were indeed eligible for CENVAT credit.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, granting consequential relief as per the law. The judgment emphasized the significance of the 'user test' in determining the eligibility of structural items for CENVAT credit, ultimately ruling in favor of the appellant based on the evidence presented.