Custom, Excise & Service Tax Tribunal
Customs Excise & Service Tax Appellate ... vs C.C.E., Ahmedabad on 19 January, 2018
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, 2nd Floor, Bahumali Bhavan, Asarwa, Ahmedabad Central Excise Appeal No.13784 of 2014 -SM Arising out of the Order-in-Appeal No.AHM-exxcus-002-APP-132-14-15 dated 26.8.2014 passed by the Commissioner (Appeals I), Central Excise, Ahmedabad. SKF Technologies (India) Pvt. Ltd. .. Appellant Vs. C.C.E., Ahmedabad .. Respondent
Appearance:
Present Shri J. Surti, Advocate for the Appellant Present Shri L.Patra, A.R. for the Respondent-Revenue Coram: Honble Dr. D.M. Misra, Member (Judicial) Date of hearing/decision:11.10.2017 Date of pronouncement:19.01.2018 Final Order No.A/10170/2018 Per Dr. D.M. Misra:
This appeal is filed against OIA No. AHM-exxcus-002-APP-132-14-15 dated 26.8.2014 passed by the Commissioner (Appeals I), Central Excise, Ahmedabad.
2. Briefly stated the facts of the case are that alleging that the appellant had wrongly availed total CENVAT credit of Rs.4,25,841/- on M.S. Flats used for earthing and connecting of 66KV Switch yard, pre-fabricated windows and doors used in the factory, Hardener chemicals used mainly for flooring in the factory for holding structural of capital goods and machines tools and accessories for fabrication of capital goods in the factory, 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 an appeal before the Ld. Commissioner (Appeals), who in turn, rejected their appeal. Hence, the present appeal.
3. The Ld. Advocate Shri J. Surti for the appellant submits that the items being used for the purposed used for supporting structures of the 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 judgment 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.
6. Following the aforesaid judgment, the impugned order is set-aside and the appeal is allowed.
(Pronounced in the open Court on 19.01.2018 ) (Dr. D.M. Misra) Member (Judicial scd/ E/13784/2014-SM 3