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2019 (5) TMI 131 - AT - Central ExciseCENVAT Credit - Capital goods - MS channels and MS angles used to give support to the foundation of Pollution Control Equipment - HELD THAT - It has been held in a slew of judgments by various High Courts that MS structurals which are used to support plant and machinery or which went in erecting foundations to hold plant and machinery are integral part of capital goods. In M/S. THIRU AROORAN SUGARS, M/S. DALMIA CEMENTS (BHARAT) LTD. VERSUS CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, THE COMMISSIONER OF CENTRAL EXCISE 2017 (7) TMI 524 - MADRAS HIGH COURT , the Hon ble High Court has held that whether user test is applied or the test that they are integral part of capital goods applied , such items are eligible to get Cenvat benefit as they fall within the scope and ambit of Rule 2 (a) (A) as well as 2 (k) of CCR, 2004. Credit allowed - appeal allowed - decided in favor of appellant.
Issues:
Cenvat credit on MS channels and MS angles for Pollution Control Equipment foundation support. Analysis: The case involved the appellants availing 50% credit on MS channels and MS angles used for supporting the foundation of Pollution Control Equipment during the year 2008-09. A Show Cause Notice was issued proposing recovery of Cenvat credit with interest and penalty under Rule 15 of Cenvat Credit Rules, 2004. The original authority confirmed the demand and imposed penalties, which was partially upheld by the Commissioner (Appeals) in an order dated 25.10.2012, leading to the current appeal. During the hearing, the appellant's representative cited various judgments, including those by the High Courts of Madras and Chhattisgarh, to support their case. They argued that MS structurals supporting plant and machinery are integral parts of capital goods, making them eligible for Cenvat benefit under Rule 2(a)(A) and 2(k) of CCR, 2004. The High Court decisions highlighted the eligibility of items like MS channels and angles for Cenvat credit, emphasizing their role in supporting plant and machinery. On the contrary, the Ld. AR opposed the appeals, relying on the Hon'ble Apex Court's decision in Saraswathi Sugar Mills case, where it was stated that iron and steel structures are not components or capital goods for sugar manufacturing plants. The Ld. AR argued that items like MS channels, angles, plates, bars, and HR coils do not qualify as components, spares, or accessories of capital goods as per the Cenvat Credit Rules. After hearing both sides and considering the facts, the Tribunal found that the issue was no longer res integra based on various High Court judgments. The Tribunal noted that MS structurals supporting plant and machinery are integral parts of capital goods, making them eligible for Cenvat benefit. The Tribunal cited precedents from the High Courts of Madras, Chhattisgarh, and Gujarat, emphasizing the eligibility of items like MS channels and angles for Cenvat credit. The Tribunal also highlighted its own decisions following similar reasoning. Consequently, the Tribunal set aside the impugned order, allowing the appeal with consequential benefits as per law. The decision was based on the established eligibility of MS structurals for Cenvat credit, as supported by various legal precedents and interpretations of the Cenvat Credit Rules. (Order dictated and pronounced in the Open Court)
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