2016 (10) TMI 675 - AT - Central Excise

Tribunal grants cenvat credit on steel items used in factory support structures

Vaswani Industries Ltd. Versus CCE, Raipur

Vaswani Industries Ltd. Versus CCE, Raipur - TMI Issues involved:1. Eligibility of cenvat credit on CTD bars, TMT bars, etc. used in the manufacture of fabrication of various structures inside the factory.Detailed Analysis:The appeals revolved around the eligibility of the appellants to claim cenvat credit on CTD bars, TMT bars, etc. used in the fabrication of structures within their factory premises. The dispute arose as these items were neither classified as inputs nor capital goods. The Original Authority denied the credit availed on these items, imposing penalties as well. On appeal, the ld. Commissioner (Appeals) upheld the original orders, leading to the present appeals before the Tribunal.The main contention from the appellants' side was that the M.S. items used in the fabrication of structural items were integral to the operation of specific capital machinery in their Sponge Iron Plant. These structures were crucial for supporting machines like furnaces, chimneys, and material handling systems, without which the manufacturing process could not take place. The appellants relied on various precedents to support their argument.On the other hand, the Revenue argued that the iron and steel items in question were of a general nature, falling under Chapter 72 and 73, and did not qualify as inputs or capital goods. They cited relevant legal judgments to support their position, emphasizing that the items in question could not be considered for cenvat credit.After hearing both sides and examining the appeal records, the Tribunal focused on the key issue of the appellants' eligibility for cenvat credit on the mentioned items used in fabricating support structures within their factory. The Tribunal referred to a recent decision in the case of Singhal Enterprises Ltd., where a similar set of facts was examined, and credit was deemed admissible. The Tribunal analyzed the user test to determine whether the structural items qualified as capital goods, ultimately concluding that they fell within the ambit of Capital Goods as per Rule 2(a) of the Cenvat Credit Rules, entitling the appellants to claim the credit.Moreover, the Tribunal addressed the Revenue's reliance on various legal precedents, highlighting that the cases cited were distinguishable from the present situation. The Tribunal emphasized that upon usage, the steel items in question became an integral part of the capital machinery, aiding in its operation. The Tribunal's detailed analysis and application of legal principles led to the conclusion that the impugned orders denying the credit could not be sustained, resulting in the appeals being allowed.