2018 (3) TMI 606 - AT - Central Excise

CENVAT credit - MS plates, sheets, beams, angles etc. used in structural construction of factory buildings, workshop, work shed etc. and also for structural supports of pipelines and storage tank - Held that - The Tribunal in the appellant s own case M/s. Chemplast Sanmar Ltd. Versus Commissioner, LTU, Chennai 2018 (2) TMI 4 - CESTAT CHENNAI for a period prior to 7.7.2009 which analyzed the very same issue held that when the MS items are used for structural support of capital goods applying the user test evolved by the Hon ble Supreme court in the case of Rajasthan Spinning and Weaving Mills Ltd. 2010 (7) TMI 12 - SUPREME COURT OF INDIA , observed that pipelines cannot be made functional without properly securing them and these structural supports are integral part of such plant and machinery. The disallowance of credit is unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Applicability of CENVAT credit on MS items used for structural support of capital goods.

Analysis:
The appellants availed irregular credit on various MS items categorized as capital goods. The Department contended that credit on MS plates, sheets, beams, angles used in structural construction is not eligible. The original authority confirmed the demand, interest, and penalties, leading to the appeal. The appellant argued that credit was only taken on MS items used as structural support for tanks and pipelines, crucial for their functionality.

The appellant's counsel emphasized that the MS items were not used for civil constructions but as structural support for tanks and pipelines. He cited precedents to support the eligibility of credit on such items, challenging the reliance on past decisions like Vandana Global Ltd. He referred to the Hon’ble High Court of Madras decision and a Tribunal ruling in the appellant’s favor from 2017.

During the hearing, the Commissioner relied on the Vandana Global Ltd. case to deny credit, stating that steel structures become immovable property post-fabrication. However, the appellant presented photographs showing the usage of MS items solely for supporting tanks and pipelines. The Tribunal analyzed earlier decisions and the user test from Rajasthan Spinning and Weaving Mills Ltd. case, concluding that disallowing credit was unjustified. Citing the Thiru Arooran Sugars case and others, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief.

A miscellaneous application for changing the respondent's cause title was granted, and the judgment was dictated and pronounced in open court.