Steel items used for fabricating capital goods qualify for CENVAT credit under Rule 2(l)/2(k) following Vandana Global precedent

CESTAT Kolkata ruled in favor of the appellant regarding CENVAT credit eligibility for steel items including angles, channels, beams, joists, sheets, plates, and coils. Following the precedent set by Chhattisgarh HC in Vandana Global Limited case, the tribunal held that steel items used for fabricating capital goods or inputs qualify for CENVAT credit under Rule 2(l)/2(k) of CENVAT Credit Rules, 2004. The demand for duty recovery was deemed unsustainable, and penalty imposition was rejected. Appeal allowed.

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Issues involved:
The appeal against the Order-in-Original confirming duty demand, interest, and penalty on availed Cenvat credit for iron and steel products used in manufacturing capital goods. The key issue is the eligibility of Angles, Channels, Beams, Joists, Sheets, Plate, Coils, etc., as 'inputs' for Cenvat credit under the Cenvat Credit Rules, 2004.

Details of the Judgment:

Issue 1: Eligibility of Angles, Channels, Beams, Joists, Sheets, Plate, Coils, etc., as 'inputs' for Cenvat credit:

The appellant claimed Cenvat credit on these steel products used in the manufacture of capital goods, supported by a Chartered Engineer's Certificate. The department contended that these items do not qualify as 'Capital goods' under Rule 2(a) of the Cenvat Credit Rules, 2004. The Commissioner disallowed the credit, leading to the appeal.

Decision:
The Tribunal referred to the decision of the Hon'ble Chhattisgarh High Court and its own precedent in M/s Uniglobal Papers Pvt. Ltd. case. They emphasized the 'user test' principle from the Supreme Court's judgment in CCE, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd. The Tribunal held that the structural steel items used in fabricating support structures for capital goods qualify as 'Capital Goods' under Rule 2(a) of the Cenvat Credit Rules, entitling them to Cenvat credit. Citing the High Court of Karnataka's ruling in Commissioner of Central Excise, Bangalore-II v. SLR Steels Ltd., the Tribunal concluded that the demand for duty and penalty was unsustainable, allowing the appeal.

Outcome:
The appeal was allowed, and the demand confirmed in the impugned order was deemed unsustainable, thus negating the need for duty payment or penalty imposition.

This comprehensive summary highlights the issues involved, the arguments presented, key legal interpretations, and the final decision of the Appellate Tribunal CESTAT KOLKATA in the cited judgment.

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