Custom, Excise & Service Tax Tribunal
Duravit India Pvt. Ltd vs C.C.E.Cus. & S.Tax, Vadodara on 17 August, 2017
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, 2nd Floor, Bahumali Bhavan, Asarwa, Ahmedabad Central Excise Appeal No.13614 of 2013-SM Arising out of the Order-in-Appeal No.PJ/2010/VDR-I/2013-14 dated 15.7.2013 passed by the Commissioner (Appeals), Central Excise, Customs & Service Tax , Vadodara. Duravit India Pvt. Ltd .. Appellants Vs. C.C.E.Cus. & S.Tax, Vadodara .. Respondent
Appearance:
Present Shri Mithil Dave, Advocate for the appellants Present Dr. J. Nagori, A.R. for the Respondent-Revenue Coram: Honble Dr. D.M. Misra, Member (Judicial) Date of hearing/decision: 17.8.2017 Final Order No.A/11834/2017 Per Dr. D.M. Misra:
Heard both sides. The short question involved in the present case is: whether the appellants are eligible to avail CENVAT credit on the duty paid on angles, channels, beams, girders plats, sheets, coils, bars, cements etc. used for fabrication of structures for machinery, factory, roads etc. during the period January 2009 to December, 2009. It is the contention of the ld. Advocate for the appellant that duty paid on angles, channels, beams etc. used in the structure for holding the capital goods and also fabrication of the capital goods are admissible to CENVAT credit under Rle 2(k) of Cenvat Credit Rules, 2004. In support, he has referred to the decision of this Tribunal in the case of Singhal Enterprises Pvt. Ltd. vs. C.Cus. & C. Ex., Raipur 2016 (341) ELT 372 (Tri-Del.)
3. Ld. A.R. for the Respondent-Revenue has submitted that the appellant had availed inadmissible credit on angles, channels, beams etc. which were used in the fabrication of structure, factory, road etc.
4. I find that the appellant had availed credit on cement and other steel items namely, angles, channels, beams etc. claimed to have been used in the fabrication of capital goods and structures for capital goods. From the explanation on the use of this materials annexed at page No.56 of the appeal paper book, it is clear that cement has been utilized for building road and other purposes and therefore, not eligible to credit. However, as far as admissibility of CENVAT credit on the duty paid inputs viz. angles, channels, beams etc. used in the fabrication of machinery, in principle, the same is admissible as per the judgment of the Tribunal in the case of Singhal Enterprises Pvt. Ltd. vs. C.Cus. & C. Ex., Raipur (supra) 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 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.
5. However, from the record it is not clear the exact quantity of angles, channels, beams etc. that were used in the fabrication of machinery and structure of capital goods, hence to ascertain the said factual position, the matter is remanded to the adjudicating authority for scrutiny of the claim of the Appellant. In the result, the impugned order is modified to this extent and the appeal is partly allowed mentioned as above.
(Dr. D.M. Misra) Member (Judicial scd/ Appeal No.E/13614 of 2013-SM 1