Custom, Excise & Service Tax Tribunal
M/S Aarti Industries Limited vs C.C.E. & S.T. Vapi on 28 August, 2017
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad Appeal No.E/12895, 12909/2014-SM [Arising out of OIA No.VAP-EXCUS-000-APP-33-34-14-15 dated 05.05.2014 passed by Commissioner (Appeals) Vapi] M/s Aarti Industries Limited Appellant Omdev R Mishra Vs C.C.E. & S.T. Vapi Respondent
Represented by:
For Appellant: None For Respondent: Sh. J. Nagori, A.R. CORAM:
HONBLE DR. D.M. MISRA, MEMBER (JUDICIAL) Date of Hearing/decision:28.08.2017 Final Order No. A/ 12096-12097 /2017 Per: Dr. D.M. Misra:
None present for the appellant. Heard Ld. DR for the Revenue.
2. This two appeals filed against order-in-appeal No. VAP-EXCUS-000-APP-33-34-14-15 dated 05.05.2014 passed by Commissioner Central Excise (Appeals),Vapi.
3. The short issue involved in the present Appeal is whether the Appellant are eligible to CENVAT credit of Rs.4,53,497/- availed on M.S. Pipes, SS Pipes, Channels, MS Plates, used for fabrication ofstructuresfor holding of machines installed in the factory premises.
4. There is no dispute of the fact that these items were used for used for fabrication of structure/ platform for support of various machines, parts of machines, supported by Chartered Engineers Certificate and held so in the impugned Order by the Ld. Commissioner(Appeals).Thus credit is admissible on the said items under the definition of input prescribed under Rule 2(k) of CCR, 2004 as held in the judgement of Principal Bench At Delhi in the case of Singhal Enterprises Pvt. Ltd. Vs. Commissioner of Central Excise & Customs, Raipur 2016 (341) ELT 372 (Tri- Del.) where under it is observed as follows:-
13. Now we turn to the question, whether credit is admissible on various structural steel items, such as, MS Angles, Sections, Channels, TMT Bar, etc., which have been used by the appellants in the fabrication of support structures on which various capital goods are placed? The same stands denied by the lower authority. The learned DR has sought disallowance of the same by citing the decision of the Larger Bench in the case of Vandana Global Ltd. (supra) and other judgments. Further, he has brought to our notice and emphasized the amendment carried out in Explanation-II to Rule 2(a) which defines the term Inputw.e.f. 7-7-2009. It has further been pleaded that the Cenvat credit claimed for the period prior to this will be covered within the decision of the Larger Bench in the case of Vandana Global Ltd. (supra).
14. The Larger Bench decision in Vandana Global Ltd.s case (supra) laid down that even if the iron and articles were used as supporting structures, they would not be eligible for the credit. Considering the amendment made w.e.f. 7-7-2009 as a clarification amendment and hence to be considered retrospectively. However, we find that the said decision of the Larger Bench was considered by the Honble Gujarat High Court in the case of Mundra Ports & Special Economic Zone Ltd., 2015 (04) LCX0197 - 2015 (39) S.T.R. 726 (Guj.), wherein it was observed that the amendment made on 7-7-2009 cannot be held to be clarificatory and as such would be applicable only prospectively.
15. We find that the controversy can be laid to rest by making a reference to the decision of the Apex Court in the case of CCE, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd., 2010 (255) E.L.T. 481 (S.C.), wherein the Honble Supreme Court has considered an identical issue of steel plates and MS channels used in the fabrication of chimney for diesel generating set. The credit stands allowed in the light of Rule 57Q of the erstwhile Central Excise Rules, 1944. In the said judgment, the Apex Court has referred to the user test evolved by the Apex Court in the case of CCE, Coimbatore v. Jawahar Mills Ltd., 2001 (132) E.L.T. 3 (S.C.), which is required to be satisfied to find out whether or not particular goods could be said to be capital goods. When we apply the user test to the case in hand, we find that the structural steel items have been used for the fabrication of support structures for capital goods. The appellants have argued that the various capital goods, such as, kiln, material handling conveyor system, furnace, etc. cannot be suspended in mid-air. They will need to be suitably supported to facilitate smooth functioning of such machines. It is obvious that the structural items have been suitably worked upon for this purpose. Accordingly, the goods fabricated, using such structurals, will have to be considered as parts of the relevant machines. The definition of Capital Goods includes, components, spares and accessories of such capital goods. Accordingly, 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.
5. In view of the settled position of law, I have no hesitation to observe that credit of the duty paid on M.S. Pipes, SS Pipes, Channels, Plates, etc.used for fabrication of structures for support of capital goods in the factory since supported by Chartered Engineers Certificate is admissible. In the result, the impugned order is set-aside and the appeals are allowed with consequential relief, if any, as per law.
(Dictated and pronounced in the open court) (Dr. D.M. Misra) Member (Judicial) Neha 3 | Page E/12895, 12909/2014-SM