2022 (1) TMI 1067 - AT - Central Excise

CENVAT Credit - capital goods/inputs of iron and steel items - MS channels, beams, bars, angles, channels, MS plates, etc. - denial of credit on the ground that these capital goods have been embedded to earth and hence becomes immovable property and lost character of the goods - HELD THAT - Considering the fact that the matter which has been remanded on 20th June 2013 is still pending and thereafter, the issue has been considered by this Tribunal and finally settled in the case of M/S. MONNET ISPAT ENERGY LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR 2016 (1) TMI 917 - CESTAT NEW DELHI where it was held that the allegation in the show cause notice that steel items used by the appellant are neither components nor spares nor accessories is not sustainable. As the facts of the case are not in dispute that the steel items in question has been used for fabrication of the capital goods which has ultimately been used for manufacture of their final product, in that circumstances, it is held that the appellant are entitled to CENVAT credit on the items in question - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of CENVAT credit on iron and steel items used for manufacturing capital goods embedded to earth.

Analysis:
The appellant appealed against the denial of CENVAT credit on iron and steel items used for manufacturing capital goods embedded to earth for making cement. The denial was based on the argument that the goods became immovable property and lost their character, thus not eligible for CENVAT credit under rule 2(k) of CENVAT Credit Rules, 2004. The appellant contended that a previous Tribunal decision supported their claim for CENVAT credit on items used for manufacturing capital goods ultimately utilized in making final products like cement.

The Authorized Representative argued that a previous case involving the appellant had been remanded back to the adjudicating authority for reconsideration, suggesting a similar course for this matter. However, after hearing both parties, the Tribunal noted that the issue previously remanded was still pending, and the matter had been resolved in the case of Monnet Ispat and Energy Ltd. The Tribunal referred to legal precedents, including the 'user test' established by the Supreme Court and rulings by the Karnataka High Court and Madras High Court, to determine the eligibility of steel items used in the fabrication of capital goods for CENVAT credit.

The Tribunal observed that the steel items in question were used for manufacturing capital goods, which were then utilized in the production of the final product. Based on the factual evidence presented and the legal principles applied, the Tribunal held that the appellant was entitled to CENVAT credit on the steel items. Consequently, the impugned order denying the credit was set aside, and the appeal was allowed with any consequential relief deemed necessary.