2017 (8) TMI 263 - AT - Central Excise

Tribunal allows CENVAT credit for steel items with Chartered Engineers' Certificate.

M/s Gujarat State Fertilizers & Chemicals Ltd. Versus C.C.E & S.T. - Vadodara-I

The Tribunal held that items like M.S. Bar, H.R. Coils, Sheets, Plates, Angles, Channels, etc., used for repair/maintenance of capital goods were eligible ... CENVAT credit - M.S. Channels, SS Plates, Double Twin Rider Ring, Piston Rod Packing, Nickel Plate, Bar, Carbon Brick, Welding Electrodes and various other items used for repairs/maintenance of the capital goods - Held that: - there is no hesitation to observe that credit on M.S. Bar, H.R. Coils, Sheets, Plates, Angles, Channels etc. used for fabrication of capital goods as well as for repairing and maintenance of the capital goods, since supported by the evidence of Chartered Engineers’ Certificate are eligible to CENVAT credit - similar issue decided in the case of M/s. Singhal Enterprises Private Limited Versus The Commissioner Customs & Central Excise, 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 - appeal allowed - decided in favor of appellant. Issues:Eligibility of CENVAT credit on various items used for repair/maintenance of capital goods.Analysis:The appeal was filed against an order passed by the Commissioner (Appeals) regarding the eligibility of CENVAT credit on items used for repair/maintenance of capital goods. The appellant had availed credit on various items, but a show-cause notice was issued for recovery of credit, which was confirmed along with interest and penalty. The appellant argued that the items were eligible for credit as per the definition of capital goods/input under CCR, 2004, citing relevant judgments. The Revenue supported the findings of the Commissioner (Appeals).Upon hearing both sides, the Tribunal analyzed the issue of eligibility of CENVAT credit on structural steel items used in fabrication and repair/maintenance of capital goods. Referring to a judgment by the Principal Bench at Delhi, the Tribunal discussed the applicability of the “user test” to determine whether the items qualify as capital goods. The Tribunal highlighted that the Supreme Court had allowed credit on similar items used in the fabrication of support structures for capital goods in a previous case. Applying the “user test” to the case at hand, the Tribunal concluded that the structural items used in fabrication of support structures fell within the definition of capital goods under Rule 2(a) of the Cenvat Credit Rules, making them eligible for CENVAT credit.Relying on precedent and the principle laid down in a previous case, the Tribunal held that items such as M.S. Bar, H.R. Coils, Sheets, Plates, Angles, Channels, etc., used for fabrication and repair/maintenance of capital goods were eligible for CENVAT credit if supported by a Chartered Engineers’ Certificate. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief as per the law.