2018 (6) TMI 980 - AT - Central Excise

Tribunal allows appeal, credits for steel items used in capital goods fabrication upheld.

The Tribunal allowed the appeal, finding that the steel items were used for fabrication and support of capital goods as directed. The Commissioner ... Admissibility of cenvat credit - use for fabrication and erection of capital goods - repair and maintenance of capital goods - remand to adjudicating authority for verification of use - period prior to 07/07/2009Admissibility of cenvat credit - use for fabrication and erection of capital goods - repair and maintenance of capital goods - Admissibility of cenvat credit on structural steel items used in fabrication, erection and support of capital goods - HELD THAT: - The Tribunal had earlier remanded the matter to the original adjudicating authority to verify the actual use of M.S. angles, beams, plates, channels and similar steel items, with a direction that if such materials were used for fabrication and erection of cooling towers, storage tanks, construction of sheds or other support structurals for erecting capital goods, credit should be allowed for the period prior to 07/07/2009. On de novo adjudication the original authority carried out physical verification and recorded detailed findings describing how the various steel items were employed in replacement, fabrication and structural works supportive of capital goods. The Commissioner (Appeals) reversed that conclusion on the ground that the items were used for repair and maintenance of existing capital goods. The Tribunal holds that those findings of use establish that the materials were employed in fabrication/erection or in structural support of capital goods and that even if characterized as repair, the materials were used for fabrication of structurals for capital goods; consequently cenvat credit is admissible for the period prior to 07/07/2009. The Commissioner (Appeals) erred in ignoring the remand direction and the factual findings of the adjudicating authority and in deciding the matter on a new ground.Set aside the order of the Commissioner (Appeals); allow cenvat credit as found admissible by the adjudicating authority for the period prior to 07/07/2009.Final Conclusion: The appeal is allowed; the Commissioner (Appeals) order is set aside and cenvat credit on the specified structural steel items is held admissible for the period prior to 07/07/2009 in accordance with the adjudicating authority's verification and this Tribunal's earlier direction. Issues:Admissibility of cenvat credit for structural steel items under Chapters 72 and 73 used for fabrication and erection of various structures for capital goods.Analysis:The case involves the admissibility of cenvat credit for structural steel items like MS angles, beams, plates, and channels under Chapters 72 and 73. The Tribunal previously remanded the matter with a clear direction that if the steel items were used for fabrication and erection of cooling towers, storage tanks, construction of sheds, and support structurals for capital goods, credit should be allowed. The adjudicating authority allowed cenvat credit based on the detailed use of each item. However, the Revenue appealed before the Commissioner (Appeals), who disallowed the credit, stating the items were used for repair and maintenance of existing capital goods, not for fabrication of new structurals.The appellant argued that the steel items were indeed used for fabrication and support of capital goods, as directed by the Tribunal, and the Commissioner (Appeals) erred in disallowing the credit on new grounds. The Tribunal's previous order clearly outlined that credit should be allowed if the steel items were used for fabrication and erection of specific structures for capital goods. The adjudicating authority, after detailed verification, confirmed the usage aligning with the Tribunal's directive, leading to the dropping of the demand.In conclusion, the Tribunal found that the Commissioner (Appeals) disregarded the Tribunal's direction and wrongly concluded that the steel items were used for repair and maintenance, instead of fabrication for capital goods. Whether for new structurals or repairs, the steel items were utilized for capital goods, making the credit admissible. Therefore, the Tribunal set aside the Commissioner (Appeals) order and allowed the appeal in favor of the appellant.