2017 (12) TMI 753 - AT - Central Excise

CENVAT credit - HR sheets, MS plates, Channels, Joists, Beams, etc., used in fabrication / support structure for bunkers, columns and pollution control equipment for enhancement of chimney height which were embedded to earth - denial on the premise that these becomes immovable property - Held that - all the steel items have been used by the appellant for fabrication of support structures for bunkers, columns and pollution control equipment for enhancement of chimney height which are integrally part of the machinery for manufacturing of their final product - reliance placed in the case of M/s. India Cements Ltd. Versus The Custom, Excise and Service Tax & The Commissioner of Central Excise 2015 (3) TMI 661 - MADRAS HIGH COURT , where it was held that the steel items which has been used for fabrication of support structures on which machinery has been affixed, although these support structures are embedded to earth, the assessee is entitled to avail CENVAT credit as without these support structures, the machinery cannot function - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
CENVAT credit denial on steel items used in fabrication for enhancement of chimney height.

Analysis:
The appellant appealed against orders denying CENVAT credit on steel items used in fabrication for enhancement of chimney height, claiming they become immovable property and thus not eligible for credit as capital goods. The issue was whether the appellant could avail CENVAT credit on these items per Rule 2(a) of CENVAT Credit Rules, 2004. The Hon'ble Member heard both parties and reviewed their submissions.

The judgment referred to a similar case before the Hon'ble High Court of Madras involving India Cements Ltd., where it was observed that steel items used for support structures, even if embedded to earth, are eligible for CENVAT credit as they are essential for machinery function. The court held that without the support structures, machinery cannot operate. Similarly, in the present case, the appellant used steel items for fabrication of support structures for bunkers, columns, and pollution control equipment, integral to machinery for manufacturing their final product. Relying on the decision in India Cements Ltd., the Hon'ble Member concluded that the appellant is entitled to avail CENVAT credit on the steel items in question.

In conclusion, the appeals filed by the appellant were allowed, granting them the right to avail CENVAT credit on the steel items used in fabrication for enhancement of chimney height. The judgment was delivered in Open Court on 26/10/2017.