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Coper Co-operative Sugar Ltd V/S C.C.E. & S.T., Surat-II

    Appeal No. E/11822/2016-SM (Arising out of OIA No. CCESA-VAD(APP-II)/VK-214/2016-17 dated 30.08.2016 passed by Commissioner (Appeals-II) Vadodara) and Final Order No. A/12090/2017

    Decided On, 28 August 2017

    At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad

    By, MEMBER

    For Petitioner: D.K. Trivedi, Advocate And For Respondents: L. Patra, A.R.

Judgment Text

1. This is an appeal filed against order-in-appeal No. CCESA-VAD (APP-II)/VK-214/2016-17 dated 30.08.2016 passed by Commissioner (Appeals-II) Vadodara.

2. Briefly stated the facts of the case are that the appellant had availed CENVAT credit on the duty materials viz; M.S. Angles, H.R. Plate & H.R. Coil, used in the fabrication of structures for support of the Capital goods installed within the factory premises. Alleging that these items are not eligible to credit, Show Cause Notice was issued to them for recovery of credit of Rs. 72,290/- for the period 2011-12

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and 2012-13. On adjudication, the demand was confirmed alongwith interest and equal amount of penalty was imposed on them. On appeal, the Ld. Commissioner (Appeals) upheld the adjudication order. Hence, the present appeal.

3. The Ld. Advocate submits that in principle the credit is admissible on the said items, being used as structures in holding various capital goods and hence components, accessories of the capital goods in view of the judgment of this Tribunal in the case of Singhal Enterprises Pvt. Ltd. vs. C. Cus. & C. Ex., Raipur : 2016 (341) ELT 372 (Tri-Del.). He further submits that there is no dispute of the fact that these items are used for the purpose mentioned above. However, he fairly accepts that Chartered Engineer's Certificate in this regard has not been placed by the Appellant.

4. Ld. AR for the Revenue on the other hand submits that the claim of the Appellant is not supported by any evidence including Chartered Engineer's Certificate, therefore, the matter may be remanded to the adjudicating authority for verification of the said claim of the Appellant.

5. I find that the Principal Bench at Delhi in Singhal Enterprises Pvt. Ltd's (supra) in laying down the principle on the eligibility of credit on similar items 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 Hon'ble 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 Hon'ble 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. Also, I find merit in the contention of the Ld. AR for the Revenue that the Appellant should establish the said use by adducing evidences. In the result, the matter is remanded to the adjudicating authority to examine the claim of the appellant on the eligibility of credit on the aforesaid items and the Appellants are free to adduce evidence including the certificate from a Chartered Engineer on its use, and the adjudicating authority is directed to decide the issue in the light of the principle of law settled by this Tribunal in Singhal Enterprises Pvt. Ltd.'s case (supra). All issues are kept open. Appeal is allowed by way of remand

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