2015 (11) TMI 1732 - AT - Central Excise

CESTAT affirms company's cenvat credit eligibility for iron & steel items used in capital goods manufacturing

The Appellate Tribunal CESTAT New Delhi dismissed the Revenue's appeal, affirming the company's eligibility for cenvat credit on iron and steel items used ... CENVAT credit - various structural products of iron and steel - denial on the ground that respondent have not produced any documentary evidence to prove that the impugned goods have been used in the manufacture of capital goods - Held that: - the Hon’ble Madras High Court in the case of India CementLtd. [2015 (3) TMI 661 - MADRAS HIGH COURT] held that iron and steel items of similar nature are eligible for credit - credit allowed - appeal dismissed - decided against Revenue. Issues:- Denial of cenvat credit on iron and steel items used in manufacturing capital goods.Analysis:The appeal before the Appellate Tribunal CESTAT New Delhi involved the denial of cenvat credit on various iron and steel items used by a company engaged in the manufacture of cement and clinker. The Revenue contended that these items were used in fabricating structures within the plant but argued that these items did not qualify as excisable capital goods as they became immovable and lost their excisable nature. The Revenue further claimed that the company failed to establish the specific usage of these items in manufacturing capital goods, making them ineligible for credit.In response, the company's counsel argued that the items were used in fabricating specific capital goods, citing relevant provisions and decisions from the Tribunal, High Court, and Supreme Court to support their claim for credit. The Tribunal examined the records and findings of the lower appellate authority, which detailed the functional usage of the iron and steel items in manufacturing capital goods, including a captive Thermal Power Plant used in the production of dutiable final products, thus falling within the definition of capital goods under the Cenvat Credit Rules, 2002.The Tribunal agreed with the lower appellate authority's findings and referenced judgments from the Madras High Court, Supreme Court, and other legal precedents to support the eligibility of iron and steel items for cenvat credit when used in fabricating capital goods. The Tribunal highlighted that the user test applied in previous cases, such as the fabrication of a chimney using steel plates and M.S. Channels, demonstrated that these items qualified as capital goods. Additionally, decisions from various High Courts and Tribunals upheld the eligibility of assesses for cenvat credit in similar situations.After considering the case laws and the factual circumstances presented, the Tribunal concluded that the findings of the lower appellate authority were correct and legally sustainable. As a result, the appeal by the Revenue was dismissed, affirming the company's eligibility for cenvat credit on the iron and steel items used in manufacturing capital goods.