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Godrej Industries Ltd V/S C.C.E., Bharuch

    Appeal No. E/10652/2017-SM (Arising out of OIA No. CCESA-VAD(APP-II)/VK-369/2016-17 Dated 24.11.2016 passed by Commissioner (Appeals-II) Vadodara) and Final Order No. A/12094/2017

    Decided On, 28 August 2017

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

    By, MEMBER

    For Respondents: S.N. Gohil, A.R.

Judgment Text

1. None appeared for the appellant. Heard Ld. AR for the Revenue.

2. This is an appeal filed against order-in-appeal No. CCESA-VAD (APP-II)/VK-369/2016-17 Dated 24.11.2016 passed by Commissioner (Appeals-II) Vadodara.

3. Briefly stated the facts of the case are that the appellant had availed CENVAT credit on various items of iron and steel viz., M.S. Plates, SS Plates, M.S. Angle etc. which are used for fabrication of capital goods and supporting struct

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ures. Alleging that these items are not eligible to credit, Show Cause Notice was issued to them for recovery of Rs. 5,99,614/- for the period 2009-2010 to 2012-2013. On adjudication, the demand of Rs. 4,88,781/- was dropped and Rs. 1,10,833 was confirmed alongwith interest and equal amount of penalty. On appeal, Ld. Commissioner (Appeals) upheld the adjudication order. Hence, the present appeal.

4. On perusal of case records, I find that these items were held to be used in fabrication of the structures for capital goods in the impugned Orders. Also, I find that the issue is covered by the judgment of the 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.). In the said case in laying down the principle on the eligibility of credit on similar items, 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 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.

5. In the result, the impugned Order is set aside and the Appeal is allowed with consequential relief, if any, as per law