2023 (11) TMI 368 - CESTAT BANGALORE

CENVAT Credit - capital goods - under erstwhile Rule 57Q/57AA of Central Excise Rules, 1944 - period March and April 2001 - HELD THAT:- There is no dispute of the fact that the capital goods have been received in the premises of the appellants during the period 1997 to 2000 and installed. Their final products are dutiable all along. They had availed 50% of the total credit in March 2001 i.e. Financial year 2000-01 and balance 50% in April 2001 i.e Financial year 2001-02 as per the procedure prescribed under the relevant Rule of Central Excise Rules,1944.

Out of the total credit disallowed an amount of Rs.61,85,230/- at Sl. No. 10 items used in construction of the ‘storage tanks’, specifically covered under the aforesaid definition of capital goods. Also, the issue of admissibility of Cenvat credit on the items used in fabrication has been settled in favour of the assessee by Karnataka High Court in SLR Steel Ltd.’s case [2012 (9) TMI 169 - KARNATAKA HIGH COURT]. The said judgment has been followed by this Tribunal in the Appellant’s own case vide Final Order No. 20701/2023 dated 06.07.2023 [2023 (8) TMI 696 - CESTAT BANGALORE].

The scope of the definition of ‘capital goods’ under erstwhile Rule 57Q has been examined by the Hon’ble Supreme Court in Rajasthan Spinning & Weaving Mills Ltd’ s case [2010 (7) TMI 12 - SUPREME COURT]. The issue involved in the said case was regarding admissibility of Modvat credit in respect of steel plates and MS channels used in the fabrication of chimney installed in the factory premises. It was argued by the Revenue that steel plates and MS channels classifiable under Chapter 7208.11 and 7216.10 of CETA,1985 cannot be considered as capital goods, hence, credit is inadmissible on the said items - The Hon’ble Supreme Court analysing Rule 57Q and following the ‘user test’ laid down in Jawahar Mills’s case [2001 (7) TMI 118 - SUPREME COURT], held that MS channels, steel plates and angles used in fabrication of chimney would fall within the definition of capital goods.

Also, a major amount of Cenvat Credit denied to the appellants are on fire extinguisher and inputs/parts mentioned at Sl. Nos. 2, 3, 4, 51, 52, and 66 amounting to Rs.4,20,109/- - the Fire extinguishers and its parts are classified under Chapter 84 of CETA,1985 and hence fall under the scope of the definition of capital goods as defined under amended Rule 57AA of the Central Excise Rules, 1944. The consumables used in the fire extinguishers are also admissible to credit as inputs. Further, this Tribunal in the case of Mylan Laboratories Ltd vs. CCE [2017 (6) TMI 669 - CESTAT HYDERABAD] held that Cenvat Credit on fire extinguishers and parts thereof are admissible.

All the items, which have been disallowed as discussed are admissible to Cenvat credit. Accordingly, the impugned orders are modified to the extent of setting aside the orders disallowing Cenvat credit of Rs. 80,02,643/- in each of the appeals - Appeal disposed off.