Tribunal grants CENVAT credit for MS items used in tank support, setting aside Department's denial

The Tribunal allowed the appeal, granting the appellant the benefit of CENVAT credit on MS items used for structural support of tanks and pipelines. The Tribunal disagreed with the Department's contention that such items were not eligible for credit, citing precedents and the specific usage of the MS items in question. The decision was influenced by a user test and previous rulings, ultimately setting aside the original order and providing the appellant with consequential relief.

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Issues:
Applicability of CENVAT credit on MS items used for structural support of capital goods.

Analysis:
The appellants availed irregular credit on various MS items categorized as capital goods. The Department contended that credit on MS plates, sheets, beams, angles used in structural construction is not eligible. The original authority confirmed the demand, interest, and penalties, leading to the appeal. The appellant argued that credit was only taken on MS items used as structural support for tanks and pipelines, crucial for their functionality.

The appellant's counsel emphasized that the MS items were not used for civil constructions but as structural support for tanks and pipelines. He cited precedents to support the eligibility of credit on such items, challenging the reliance on past decisions like Vandana Global Ltd. He referred to the Hon’ble High Court of Madras decision and a Tribunal ruling in the appellant’s favor from 2017.

During the hearing, the Commissioner relied on the Vandana Global Ltd. case to deny credit, stating that steel structures become immovable property post-fabrication. However, the appellant presented photographs showing the usage of MS items solely for supporting tanks and pipelines. The Tribunal analyzed earlier decisions and the user test from Rajasthan Spinning and Weaving Mills Ltd. case, concluding that disallowing credit was unjustified. Citing the Thiru Arooran Sugars case and others, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief.

A miscellaneous application for changing the respondent's cause title was granted, and the judgment was dictated and pronounced in open court.

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