2016 (12) TMI 219 - AT - Central Excise

Denial of Cenvat Credit on Iron & Steel for Capital Goods Support Structures Upheld

The Tribunal upheld the denial of cenvat credit on iron & steel items used in fabricating support structures for capital goods, ruling that the ... Denial of CENVAT credit - manufacture of sponge iron - whether the denial of credit for the period April 2005 to March 2010, invoking the extended period of limitation, on the ground that the inputs have been used in the manufacture of supporting structures, justified? - Held that: - the issue is squarely covered by the earlier decision of the Tribunal in the case of M/s Singhal Enterprises Pvt. Ltd. vs. CCE, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], where it was held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit In the light of the above facts and circumstances, we find no reason to interfere with the impugned order passed by the Commissioner (Appeals) - appeal dismissed - decided against Revenue. Issues:Cenvat credit denial on iron & steel items used in fabrication of support structures for capital goods.Analysis:The appeal was filed against the order passed by the Commissioner (Appeals) denying cenvat credit on iron & steel items used in the fabrication of support structures for capital goods. The appellants contended that the structures were essential for the operation of the sponge iron plant and were not permanently attached to the Earth. The issue was whether the structural items used in the fabrication of support structures qualified as capital goods under Rule 2(a) of the Cenvat Credit Rules.The Tribunal referred to a previous decision in the case of M/s Singhal Enterprises Pvt. Ltd. vs. CCE, Raipur, which addressed a similar issue. The Tribunal considered the amendment to Explanation-II to Rule 2(a) defining the term 'input' and the decision of the Larger Bench in Vandana Global Ltd.'s case. The Tribunal also mentioned the judgment of the Hon'ble Gujarat High Court in the case of Mundra Ports & Special Economic Zone Ltd. The Tribunal further referenced the decision of the Apex Court in the case of CCE, Jaipur vs. Rajasthan Spinning & Weaving Mills Ltd., which involved the fabrication of a chimney for a diesel generating set using steel plates and MS channels.Applying the user test established by the Apex Court in previous cases, the Tribunal concluded that the structural items used in the fabrication of support structures for capital goods fell within the definition of capital goods. The Tribunal noted that the support structures were essential for the functioning of various capital goods such as kilns, conveyors, and furnaces. Therefore, the structural items were considered parts of the relevant machines and qualified for cenvat credit under Rule 2(a) of the Cenvat Credit Rules.Based on the above analysis and considering the facts and circumstances of the case, the Tribunal found no reason to interfere with the order passed by the Commissioner (Appeals). The appeal filed by the Revenue was dismissed, and the cross-objection was disposed of accordingly.