2018 (1) TMI 253 - AT - Central Excise

CENVAT credit - goods used for construction of capital goods - Held that - with effect from 07.07.2009 the definition of input appearing in Rule 2(k) of the Cenvat Credit Rules, 2004 has been amended and it specifically excludes cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bar (TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods from the ambit of definition of inputs - the appellants have used the steel items on which credit has been availed as supporting structure for the capital goods - credit on items used for fabrication of supporting structure cannot be allowed - appeal dismissed.

Summary

Issues:
Denial of cenvat credit on certain capital goods.

Analysis:
The appeal was filed against the denial of cenvat credit on specific capital goods used for the construction of capital goods. The appellant argued that the goods were utilized for constructing capital goods and thus, credit should be allowed. However, it was noted that while the appellants cited various court decisions in their appeal grounds, they did not dispute the facts presented. The respondent relied on the impugned order, and upon reviewing the submissions, the impugned order described the goods in question and stated that they were used for making structures to support capital goods. This observation was not challenged by the appellants before the Commissioner or the Tribunal. The law regarding materials used for making structures was referenced to a Supreme Court judgment in Saraswati Sugar Mills, which clarified the concept of component parts in the context of capital goods.

The Tribunal found that the appellants had used the steel items for supporting structures for capital goods. Referring to the Supreme Court judgment in Saraswati Sugar Mills, it was highlighted that iron and steel structures are not essential components in certain manufacturing units. The Tribunal concurred with the finding that the steel structures did not qualify as components of the capital goods for availing exemption under the notification. Additionally, a Circular issued by the C.B.E.C. was referenced, emphasizing that all parts, components, and accessories used with capital goods are eligible for availing Modvat credit. However, it was noted that post an amendment in the Cenvat Credit Rules in 2009, certain items like cement, angles, channels, etc., used for construction purposes were specifically excluded from the definition of inputs.

In conclusion, based on the Supreme Court's clear finding and the amended definition of "input" under the Cenvat Credit Rules, the Tribunal dismissed the appeal, stating that items used for fabricating supporting structures could not be allowed for cenvat credit. The judgment was pronounced on 29/11/2017.