2023 (3) TMI 1209 - AT - Central Excise

Manufacturer wins appeal on CENVAT credit for steel items as 'inputs' and 'Capital Goods'

The Tribunal allowed the appeal filed by the manufacturer of Sponge Iron regarding the irregular availment of CENVAT Credit on steel items. It held that ... Irregular availment of CENVAT Credit - input - steel items such as TMT bars, Chequered Plate, M.S. Angles, Channels, Plates, Joists, Beams, HR Plate, Sheet and Coils, G.C. Sheet etc. - period from November 2006 to March 2008 - HELD THAT:- The issue is no more res integra since the period of dispute is from November 2006 to March 2008 and the amendment to the definition of ‘input’ was made on 07.07.2009 and which was made to be not retrospective. It is the case of the Appellant that the disputed items of iron and steel, cement, TMT Bar, MS Flat, Plate, MS Channel, MS Angle, MS Joist, MS Beam, HR Plate Bar Rods, HR Plate Coil, Mill Plate, GC Sheet, Flange Beam, GP Sheet, GP Coil, HR Sheet, HR Coil etc. were used in the factory in the manufacture of final capital goods and have been used for Kiln Support, Base, Ground Hoppers, Intermediate Bunkers, Conveyor support, Crusher support, screen support and Cooler platform and thus are eligible as inputs and are squarely covered by the definition of ‘input’. Reliance has been made on the decision of the Tribunal 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. Support found from the decision of the Hon’ble High Court of Karnataka in the case of COMMISSIONER OF CENTRAL EXCISE, BANGALORE-II VERSUS SLR STEELS LTD. [2012 (9) TMI 169 - KARNATAKA HIGH COURT] where it was held that appellate authority committed a serious error firstly in holding that the storage tank is an immovable property and secondly, on the ground that it cannot be bought and sold in the market, the criteria which is totally unwarranted and assessee is entitled to the benefit of cenvat credit. The impugned order cannot be sustained and is therefore set aside - Appeal allowed - decided in favour of appellant. Issues involved:The issues involved in the judgment are related to the irregular availment of CENVAT Credit on steel items by a manufacturer of Sponge Iron for the period from November 2006 to March 2008. The Appellant had availed CENVAT Credit on various steel items leading to a dispute and subsequent Show Cause Notices.Summary:Issue 1: Entitlement of CENVAT Credit on disputed steel itemsThe Appellant contended that the disputed iron and steel items were used in the manufacture of final capital goods and thus eligible as inputs under the definition of 'input'. The Tribunal referred to a previous decision and held that the Appellant is entitled to the credit on welding electrodes as 'inputs'.Issue 2: Admissibility of CENVAT Credit on structural steel itemsThe dispute arose regarding the admissibility of CENVAT Credit on various structural steel items used in the fabrication of support structures for capital goods. The Lower Authority denied the credit based on a Larger Bench decision. However, the Tribunal considered relevant judicial precedents and the amendment to the definition of 'Input'. It held 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 entitling the Appellant to the CENVAT credit.Conclusion:In view of the decisions cited and the application of the 'user test' to determine the eligibility of steel items as capital goods, the Tribunal set aside the impugned order disallowing the CENVAT Credit. The Appeal filed by the Appellant was allowed with consequential relief, as per law.