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of <h1>Disputed structural items qualify as capital goods for cenvat credit under Cenvat Credit Rules.</h1> <h3>DCM Shriram Ltd. Versus C.C.E., Udaipur</h3> DCM Shriram Ltd. Versus C.C.E., Udaipur - TMI Issues:1. Incorrect availing of cenvat credit on iron and steel items.2. Rejection of appeal by Commissioner(Appeals).3. Adjudication on whether certain articles qualify as inputs/capital goods for cenvat credit.Analysis:1. The appellant was found to have wrongly availed cenvat credit on iron and steel items, leading to a demand for recovery. The Department alleged that these articles were neither inputs nor capital goods. The initial demand was partially confirmed by the Assistant Commissioner, disallowing a portion of the credit. The appellant, dissatisfied with the decision, filed an appeal before the Commissioner(Appeals) which was subsequently rejected.2. The appellant argued that the rejection of the appeal was based on a decision that had been overruled by the High Court of Chhattisgarh. They cited various judgments, including one from the High Court of Rajasthan, to support their case. The Department, on the other hand, justified the decision based on a departmental instruction. The Tribunal noted that the main issue to be decided was whether the disputed articles qualified as inputs or capital goods for cenvat credit.3. The Tribunal, after considering the arguments presented, referred to past judgments and the 'User Test Principle' established by the Supreme Court. It was observed that the structural items in question, such as angles, joist, beams, etc., were used in the fabrication of support structures for capital goods. Applying the 'User Test Principle,' it was concluded that these structural items fell within the definition of capital goods under the Cenvat Credit Rules. The Tribunal criticized the Commissioner(Appeals) for relying on an overruled decision and emphasized the importance of judicial discipline to avoid unnecessary litigation and chaos.4. Citing various decisions where the 'User Test Principle' had been applied, the Tribunal held that the articles for which cenvat credit was availed indeed qualified as capital goods. The Tribunal set aside the previous order and allowed the appeal, emphasizing the need for adjudicators to stay updated on current laws and avoid relying on outdated decisions.
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