Custom, Excise & Service Tax Tribunal
Shri Chalthan Vibhag Khand Udyog vs Commissioner Of Gst & C. Ex.-Rajkot on 26 February, 2018
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad ~~~~~ Appeal No : E/10272-10273/2018 (Arising out of OIA No. CCESA-SRT(APPEAL/PS-83/2017-18 dated 16.10.2017, CCESA-SRT(APPEAL/PS-81/2017-18 dated 16.10.2017 passed by Commissioner (Appeals), GST & Central Excise, -Surat) Shri Chalthan Vibhag Khand Udyog Sahakari Mandali Limited : Appellant (s) Vs Commissioner of GST & C. Ex.-Rajkot : Respondent (s)
Represented by:
For Appellant (s) : Shri S. Jhajharia, Advocate For Respondent (s): Shri K. J. Kinariwala, AR CORAM :
Dr. D. M. Misra, Hon'ble Member (Judicial) Date of Hearing/Decision: 26.02.2018 ORDER No. A/10506-10507/2018 Per : Dr. D. M. Misra These two appeals are filed against OIA No. CCESA-SRT(APPEAL/PS-83/2017-18 dated 16.10.2017, CCESA-SRT(APPEAL/PS-81/2017-18 dated 16.10.2017 passed by Commissioner (Appeals), GST & Central Excise, -Surat.
2. Briefly stated the facts of the case are that alleging that the appellant had wrongly availed CENVAT credit of Rs. 3,79,343/- on HR Coil, MS Pipe, SS Tube, Joints etc., used for fabrication of capital goods and its supporting structures, show cause notice was issued for recovery/ appropriation of the said amount with interest and penalty. On adjudication, the demand was confirmed alongwith interest and penalty. Aggrieved by the said order, the appellant filed appeals before the Ld. Commissioner (Appeals), who inturn, rejected their appeals. Hence, the present appeals.
3. The Ld. Advocate Shri R. V. Shetty for the appellant submits that all these items were used for fabrication of the capital goods and supporting structures of capital goods, hence, eligible to credit as per the definition of capital goods/input prescribed under Rule 2 (a)/2(k) of CCR, 2004. He submits that the credit is admissible in view of the judgement of the Principal Bench At Delhi in the case of Singhal Enterprises Pvt. Ltd. Vs. Commissioner of Central Excise & Customs, Raipur 2016 (34) ELT 372 (Tri- Del.).
4. The Ld. AR for the Revenue reiterated the findings of the Ld Commissioner (Appeals).
5. I find that the issue is addressed by Principal Bench at Delhi in the case of Singhal Enterprises Pvt. Ltd. Vs. Commissioner of Central Excise & Customs, Raipur 2016 (34) ELT 372 (Tri- Del.). 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 Input w.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. Even though in principle, the appellant are eligible to credit, however, the use of the said item is not supported by evidence, hence, the matter is remanded to the adjudicating authority for verification of the said facts. Appeal is allowed by way of remand.
(Dictated and pronounced in the open Court) (D. M. Misra) Member (Judicial) G.Y. 4 Appeal No. E/10272-10273/2018