2017 (9) TMI 342 - AT - Central Excise

CENVAT credit - MS Channel, Angle, Beam, Structural Steel Round, Square Bars, MS Bright Bars, MS Ingots etc. used in fabrication of capital goods within the factory - Held that - reliance 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 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. The matter is remanded to the adjudicating authority to examine the claim of the appellant on the eligibility of credit on the aforesaid items and the Appellants are free to adduce evidence including the certificate from a Chartered Engineer on its use - appeal allowed by way of remand.

Summary

Issues Involved:
- Eligibility of CENVAT credit on specific items used in fabrication of capital goods
- Requirement of Chartered Engineer's Certificate as evidence
- Interpretation of the definition of input under Rule 2(k) of CCR, 2004
- Application of the User Test to determine eligibility of credit

Analysis:

Eligibility of CENVAT Credit:
The appellant availed CENVAT credit on various items used in the fabrication of capital goods within the factory. The dispute arose when the revenue authority issued a Show Cause Notice claiming these items were not eligible for credit, leading to a demand for recovery. The Ld. Advocate for the appellant argued that the items were used as structures to hold capital goods, making them eligible for credit under Rule 2(k) of CCR, 2004. Reference was made to a judgment by the Principal Bench at Delhi in a similar case to support the appellant's claim. However, it was acknowledged that the Chartered Engineer's Certificate confirming the use of these items was not provided by the appellant.

Requirement of Chartered Engineer's Certificate:
The revenue authority contended that the appellant's claim lacked supporting evidence, particularly the absence of a Chartered Engineer's Certificate. Consequently, they suggested remanding the matter to the adjudicating authority for verification of the claim based on the evidence provided by the appellant, including the required certificate.

Interpretation of Input Definition:
The Tribunal referred to a judgment by the Principal Bench at Delhi in a similar case to establish the principle regarding the eligibility of 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 determining whether such items qualify as capital goods, emphasizing the need for structural items to support the smooth functioning of machines like kilns, conveyors, and furnaces.

Application of User Test:
Applying the User Test, the Tribunal concluded that structural items used in the fabrication of support structures for capital goods fall within the ambit of Capital Goods as defined under Rule 2(a) of the Cenvat Credit Rules. However, the Tribunal also agreed with the revenue authority's argument that the appellant must provide evidence, including the Chartered Engineer's Certificate, to establish the use of these items. Consequently, the matter was remanded to the adjudicating authority for further examination based on the principles established in the referenced judgment.

In conclusion, the appeal was allowed by way of remand, with the adjudicating authority directed to decide the issue of credit eligibility on the specific items in light of the legal principles outlined in the judgment cited during the proceedings.