2017 (8) TMI 1219 - AT - Central Excise

CENVAT credit - various Iron & steel articles like Angles Channels Joints Beams Plates etc. - denial on the ground that these items were used as capital goods and construed to be components or parts of capital goods - It was alleged that the said items were used for fabrication of construction materials required for stationing machineries on concrete foundations and were thus in the nature of immovable property to be taken as non-excisable goods - Held that - the usage of these items in various capital goods/parts and components of such capital goods fabricated inside the plant of the respondent has been examined by the original authority. In fact the original authority taken into consideration the basic objection against the credit raised in the SCN. Admittedly in large number of cases the Tribunal as well as various High Courts allowed credit in similar set of facts - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
- Availment of CENVAT Credit on iron and steel articles used as capital goods
- Classification of iron and steel items under Chapter 72
- Application of user test to determine eligibility for CENVAT Credit
- Interpretation of capital goods under CENVAT Credit Rules

Analysis:

Issue 1: Availment of CENVAT Credit on iron and steel articles used as capital goods
The Respondent availed CENVAT Credit on various iron and steel articles, claiming they were used as capital goods or components of capital goods. The Adjudicating Authority dropped proceedings, but the Revenue appealed. The Commissioner (Appeal) rejected the appeal, leading to the Revenue's further appeal.

Issue 2: Classification of iron and steel items under Chapter 72
The Appellant argued that iron and steel items under Chapter 72, used in the fabrication of support structures, are not parts or accessories of capital goods. They contended that these items, though classified under Chapter 72, are of a general nature and not specifically identified as parts of any identifiable capital goods.

Issue 3: Application of user test to determine eligibility for CENVAT Credit
The Respondent's Counsel supported the original authority's findings, emphasizing the nature and usage of the iron and steel items. They highlighted that the original authority examined various capital goods like Angles, Channels, Joints, Beams, Plates, etc., and applied the user test as laid down by the Hon'ble Supreme Court in previous judgments.

Issue 4: Interpretation of capital goods under CENVAT Credit Rules
The Tribunal analyzed the usage of iron and steel items in various capital goods and their components fabricated inside the plant of the Respondent. Referring to past judgments, including the user test principle, the Tribunal concluded that the items in question were eligible for CENVAT Credit. The Tribunal cited various cases where similar credits were allowed, indicating a consistent application of the user test principle.

In conclusion, the Tribunal dismissed the appeal, affirming the impugned order's detailed analysis and sustainable conclusion in line with precedents set by the Hon'ble Supreme Court, various High Courts, and the Tribunal. The decision highlighted the importance of applying the user test to determine the eligibility of iron and steel items as parts or components of capital goods for availing CENVAT Credit.